Foreign Earned Income Exclusion
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Definition of 'Foreign Earned Income Exclusion'
The amount of income earned from a foreign source that is excludable from domestic taxation. The foreign earned income exclusion can only be claimed by those who meet the foreign residence or physical presence tests, who have a tax home in a foreign country, and have foreign income.
Tax payers wishing to exclude foreign earned income must make an election to do so.
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Investopedia explains 'Foreign Earned Income Exclusion'
During the 2007 tax year, the maximum foreign earned income exclusion was $85,700. If the election is made, the taxpayer must proactively elect to use this exclusion (on an moving-forward basis); this exclusion is not assigned automatically.
The exclusion is elected on Form 2555. Furthermore, taxpayers who claim this exclusion cannot deduct any business expenses incurred relative to the foreign income, make domestic retirement plan contributions of any kind that are based on this income or claim the foreign tax credit or deduction for any taxes paid to a foreign government on this income.
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Search results for 'Foreign Earned Income Exclusion'
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... This is referred to as the foreign-earned income exclusion. In order to
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... interest deduction; Tuition and fees deduction; Foreign-earned income exclusion;
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... Foreign Earned Income Exclusion For an expat that is still a resident of the United
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... government. Resident aliens may claim the foreign earned income exclusion
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... US government assesses tax on all income earned from foreign ... Taxpayers who earn income
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... tax treatment of different income types, foreign securities, and wash ... Earned income
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... are paid by a US or qualified foreign corporation and ... qualified annuities are taxable
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