Welcome Guest. Register Now!  



Reply
 
LinkBack Thread Tools Search this Thread Display Modes
  #1 (permalink)  
Old 04-14-2014, 12:14 PM
Junior Member
 
Join Date: Apr 2014
Posts: 1
Am I counting the same foreign tax credit twice?

Can I claim Foreign Earned Income Exclusion if I am counting days from the previous tax year to pass the physical presence test? I filed a Foreign Tax Credit in 2012. In 2013, I am eligible for Foreign Earned Income Exclusion if I count the total days I was in country.

2012: I lived and worked in a foreign country starting in June; claimed Foreign Tax Credit for 2012 U.S. tax return.
2013: I continued to live and work in the same foreign country until May. If I include 2012, I was in country for 330 days.

Am I counting the same foreign tax credit twice?

Thanks!



Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
  #2 (permalink)  
Old 04-15-2014, 09:46 AM
Moderator
 
Join Date: Oct 2010
Posts: 5,233
Quote:
Originally Posted by lupo44 View Post
Can I claim Foreign Earned Income Exclusion if I am counting days from the previous tax year to pass the physical presence test? I filed a Foreign Tax Credit in 2012. In 2013, I am eligible for Foreign Earned Income Exclusion if I count the total days I was in country.

2012: I lived and worked in a foreign country starting in June; claimed Foreign Tax Credit for 2012 U.S. tax return.
2013: I continued to live and work in the same foreign country until May. If I include 2012, I was in country for 330 days.

Am I counting the same foreign tax credit twice?

Thanks!
no I do not think so;you may claim FEIE partially in 2012 and 2013. The foreign earned income exclusion, FEIE, allows you to exclude from tax a certain amount of your foreign earned income , $97600 for 2013, (wages and self-employment earnings). You claim the exclusion on form 2555 and must reside outside the US and meet certain other requirements. If your income is above the exclusion amount, you can still take a foreign tax credit for taxes paid on the the income in excess of $ 97,600and this calculation is quite complicated. The foreign tax credit is available to avoid double taxation of foreign income. The credit is claimed on form 1116 and must be calculated separately for certain defined categories of income. That is, one credit for general limitation income (wages, etc.), one credit for passive income (interest, dividends, rents, etc), and so on. In calculating the credit, deductions claimed on your tax return must be allocated to both foreign and non-foreign income. If you don't want to take the credit, you can instead take any foreign taxes paid as an itemized deduction on Sch A, if you itemize. Most of the time, this is the least attractive alternative, but not always. Usually if your foreign earned income is under the exclusion amount and you do not have lots of other income, then the foreign earned income exclusion is the simplest and preferred option, if you qualify to use it.



Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
Ads
Reply


Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

vB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
how to carryover foreign tax credit C.Ortiz108 Income 5 02-25-2014 07:13 AM
Foreign Tax Credit Carryover acferrad Income 0 01-24-2011 08:33 PM
Foreign Tax Credit Carryover bdclark Tax Credit 3 11-22-2010 11:29 AM
Foreign Tax Credit babo1343 Miscellaneous 0 09-07-2010 12:50 AM
Can I take foreign tax credit or deduct taxes paid on foreign investments in IRA? jswift IRA/Sep 0 02-14-2010 02:03 AM

Follow us on Facebook Follow us on Twitter Google Buzz Rss Feeds

» Categories
 
Individual
 » Income
 » IRA/Sep
 » Medical
 
Corporations
 » Payroll
 
Forum for CPAs
 
Financial Planning