As discussed, U.S. citizens, including resident aliens, must pay U.S. federal income tax on their worldwide income. This becomes an issue if you earn income outside the US. Hence, the U.S. implemented the Foreign Earned Income Exclusion (FEIE) brought to you by the tax law FBI. The FEIE is the amount of foreign income for which a US taxpayer does not have to pay U.S. federal income tax. Taylor works abroad and earns income outside the U.S. Technically, she has to pay federal income tax on her wages. However, her federal income tax bill will be zero if the amount is below the FEIE. Let's go over the requirements: 1. Income: This includes wages and self-employment income. 2. Tax home in a foreign country: This is very fact-driven and will be discussed in a later video. 3. Citizenship or resident alien status: If you're a resident alien, does your national country and the US have an existing tax treaty? 4. Physical presence: Were you physically present in a foreign country for at least 330 full days during any period of 12 consecutive months? 5. Bona fide residency: Were you a bona fide resident of the foreign country for an uninterrupted period that includes an entire tax year? For further details, visit the Tax Law website for a detailed discussion of the FEIE. Also, visit our blog at Low Tax Law for more information. We'll be with you every step of the way. Music.
Award-winning PDF software
Video instructions and help with filling out and completing When Form 3520 Exclusion
