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Form 2555-EZ online Fargo North Dakota: What You Should Know
Earned Income exclusion (90,650 in 2018), and employment income must be earned abroad. Foreign Earned Income Exclusion (Earned Expenses) The earned income exclusions are a part of the foreign earned income exclusion under IRC Section 611(a) of the tax code. This exclusion allows foreign income (and certain income from sources within the US) to be excluded from income tax for the United States federal income tax purposes. An employee's foreign gross income is the income from employment abroad (such as wages or salaries) minus certain deductions and credits, as required by IRC Section 72 that relate to foreign-source income. “A taxpayer may elect to exclude income from employment of a US expatriate from the income of the expatriate for purposes of the foreign earned income exclusion”. The foreign earned income excluded is based on two thresholds of income, the foreign base earnings test and the foreign source income test. For more information, see Notice 2014-34, Q&A 26 and Foreign Base Earnings Testing in Publication 4557, US Tax Guide for Foreign Base Company Income. There are three steps to claiming the Foreign earned income exclusion: (1) qualifying (2) qualifying abroad (3) qualifying in the US. In order to qualify in the US, you must meet the minimum residency tests for a tax year. Qualifying abroad is required if you are a nonresident alien with full-time habitation in the US for longer than 183 days. The residency requirement can be found here. The requirements include the following: · You must reside in the United States and have a present intention to become a US resident; · You have no significant presence in the United States over 5 years, except to attend school or to perform services for the Government of the United States; · You have a fixed address in the United States; and You are not engaged in the business of manufacturing or exporting goods, services or activities, and you are not a party to a business dealing or otherwise dealing with the United States, whether in the form of a partnership, a corporation, an S corps, or any other business entity. You are not in the United States during the tax year to carry on a trade or business or to arrange for or manage any trade or business with the United States. Your residency test will determine whether you satisfy the three tests above.
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