Publication 54 - Tax Guide For U.s. Citizens And Resident Aliens Abord - 2011 Page 16
ADVERTISEMENT
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44•
Early in 2012, the IRS will publish in the
Amounts you include in your income be-
income you receive for work done in Austria is
Internal Revenue Bulletin a list of the only coun-
cause of your employer’s contributions to
income from a foreign source even if the income
a nonexempt employee trust or to a non-
is paid directly to your bank account in the
tries that qualify for the waiver for 2011 and the
qualified annuity contract.
United States and your employer is located in
effective dates. If you left one of the countries on
New York City.
or after the date listed for each country, you can
•
Any unallowable moving expense deduc-
meet the bona fide residence test or physical
tion that you choose to recapture as ex-
Example. You are a U.S. citizen, a bona
presence test for 2011 without meeting the mini-
plained under Moving Expense
fide resident of Canada, and working as a min-
mum time requirement. However, in figuring
Attributable to Foreign Earnings in 2 Years
ing engineer. Your salary is $76,800 per year.
your exclusion, the number of your qualifying
in chapter 5.
You also receive a $6,000 cost-of-living allow-
days of bona fide residence or physical pres-
•
Payments you receive after the end of the
ance, and a $6,000 education allowance. Your
ence includes only days of actual residence or
tax year following the tax year in which
employment contract did not indicate that you
presence within the country.
you performed the services that earned
were entitled to these allowances only while
the income.
outside the United States. Your total income is
U.S. Travel Restrictions
$88,800. You work a 5-day week, Monday
through Friday. After subtracting your vacation,
Earned income. This is pay for personal serv-
If you are present in a foreign country in violation
you have a total of 240 workdays in the year.
ices performed, such as wages, salaries, or pro-
of U.S. law, you will not be treated as a bona fide
You worked in the United States during the year
fessional fees. The list that follows classifies
resident of a foreign country or as physically
for 6 weeks (30 workdays). The following shows
many types of income into three categories. The
present in a foreign country while you are in
how to figure the part of your income that is for
column headed Variable Income lists income
violation of the law. Income that you earn from
work done in Canada during the year.
that may fall into either the earned income cate-
sources within such a country for services per-
gory, the unearned income category, or partly
formed during a period of violation does not
into both. For more information on earned and
qualify as foreign earned income. Your housing
Number of
unearned income, see Earned and Unearned
expenses within that country (or outside that
days worked
Income, later.
in Canada
country for housing your spouse or dependents)
during the
while you are in violation of the law cannot be
Earned
Unearned
Variable
year (210)
included in figuring your foreign housing
Income
Income
Income
Total
amount.
Number of
Salaries and
Dividends
Business
×
income
=
$77,700
days of work
For 2011, the only country to which travel
wages
Interest
profits
($88,800)
during the
restrictions applied was Cuba. The restrictions
Commissions
Capital gains
Royalties
year for
Bonuses
Gambling
Rents
applied for the entire year.
which
Professional
winnings
Scholarships
However, individuals working at the U.S. Na-
payment was
fees
Alimony
and
val Base at Guantanamo Bay in Cuba are not in
made
Tips
Social security
fellowships
(240)
violation of U.S. law. Personal service income
benefits
earned by individuals at the base is eligible for
Pensions
Your foreign source earned income is
the foreign earned income exclusion provided
Annuities
$77,700.
the other requirements are met.
In addition to the types of earned income
listed, certain noncash income and allowances
Foreign Earned Income
Earned and
or reimbursements are considered earned in-
Unearned Income
come.
To claim the foreign earned income exclusion,
Noncash income. The fair market value of
the foreign housing exclusion, or the foreign
Earned income was defined earlier as pay for
property or facilities provided to you by your
housing deduction, you must have foreign
personal services performed. Some types of in-
employer in the form of lodging, meals, or use of
earned income.
come are not easily identified as earned or
a car is earned income.
Foreign earned income generally is income
unearned income. Some of these types of in-
you receive for services you perform during a
come are further explained here.
Allowances or reimbursements. Earned in-
period in which you meet both of the following
come includes allowances or reimbursements
Income from a sole proprietorship or part-
requirements.
you receive, such as the following amounts.
nership. Income from a business in which
•
•
Your tax home is in a foreign country.
Cost-of-living allowances.
capital investment is an important part of pro-
•
•
You meet either the bona fide residence
ducing the income may be unearned income. If
Overseas differential.
test or the physical presence test.
you are a sole proprietor or partner and your
•
Family allowance.
personal services are also an important part of
To determine whether your tax home is in a
•
Reimbursement for education or education
producing the income, the part of the income
foreign country, see Tax Home in Foreign Coun-
allowance.
that represents the value of your personal serv-
try, earlier. To determine whether you meet ei-
ices will be treated as earned income.
•
ther the bona fide residence test or the physical
Home leave allowance.
presence test, see Bona Fide Residence Test
Capital a factor. If capital investment is an
•
Quarters allowance.
and Physical Presence Test, earlier.
important part of producing income, no more
•
Reimbursement for moving or moving al-
than 30% of your share of the net profits of the
Foreign earned income does not include the
lowance (unless excluded from income as
business is earned income.
following amounts.
discussed later in Reimbursement of em-
If you have no net profits, the part of your
•
ployee expenses under Earned and
The value of meals and lodging that you
gross profit that represents a reasonable allow-
Unearned Income).
exclude from your income because the
ance for personal services actually performed is
meals and lodging were furnished for the
considered earned income. Because you do not
convenience of your employer.
Source of Earned Income
have a net profit, the 30% limit does not apply.
•
Pension or annuity payments you receive,
Example 1. You are a U.S. citizen and meet
The source of your earned income is the place
including social security benefits (see Pen-
the bona fide residence test. You invest in a
where you perform the services for which you
sions and annuities, later).
partnership based in Cameroon that is engaged
received the income. Foreign earned income is
•
Pay you receive as an employee of the
income you receive for working in a foreign
solely in selling merchandise outside the United
U.S. Government. (See U.S. Government
country. Where or how you are paid has no
States. You perform no services for the partner-
Employees, later.)
effect on the source of the income. For example,
ship. At the end of the tax year, your share of the
Page 16
Chapter 4 Foreign Earned Income and Housing: Exclusion – Deduction
ADVERTISEMENT
0 votes
Related Articles
Related forms
Publication 500 - Tax Guide For Wisconsin Political Organizations And Candidates - Department Of Revenue
Financial
Form Dhcs 0001 - California U.s. Citizens And Nationals Applying For Medi-cal Must Show Proof Of Citizenship And Identity (korean) - Health And Human Services Agency
Legal
Related Categories
Parent category: Financial