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Old 05-25-2014, 11:20 PM
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2014 overseas income

Hey guys-

I am a pilot, i am considering taking a job overseas, what are the rules regarding income tax when it is earned in another foreign country and I am residing in that foreign country all year? My understanding was something like under 98k was able to be taken in and is tax free to the US govt. Is that still something I have to report or just if it exceeds the 98k?



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Old 05-26-2014, 01:26 AM
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Originally Posted by USPilot View Post
Hey guys-

I am a pilot, i am considering taking a job overseas, what are the rules regarding income tax when it is earned in another foreign country and I am residing in that foreign country all year? My understanding was something like under 98k was able to be taken in and is tax free to the US govt. Is that still something I have to report or just if it exceeds the 98k?
I am a pilot, i am considering taking a job overseas, what are the rules regarding income tax when it is earned in another foreign country and I am residing in that foreign country all year?==============>>>>>>>>>>>As a US citizen/ a resident, you are subject to US taxes on your world wide income and US source income to the IRS/state;however, aslongas you paid or accrued foreign taxes to a foreign country on foreign source income and are subject to U.S. tax on the same income, you may be able to take either a credit on line 47 of 1040 by using form 1116 or an itemized deduction on Sch A of 1040 line 8 ,as other exp., for those taxes. Taken as a deduction, foreign income taxes reduce your U.S. taxable income.Taken as a credit, foreign income taxes reduce your U.S. tax liability. In most cases, it is to your advantage to take foreign income taxes as a tax credit.But Once you choose to exclude either foreign earned income or foreign housing costs, you cannot take a foreign tax credit for taxes on income you can exclude UNLESS your foreign source income is higher than FEIE amount;. To claim the foreign earned income exclusion, the foreign housing exclusion, or the foreign housing deduction, you must have foreign earned income, your tax home must be in a foreign country, and you must be one of the following: A U.S. citizen who is a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year; A U.S. resident alien who is a citizen or national of a country with which the United States has an income tax treaty in effect and who is a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year, or A U.S. citizen or a U.S. resident alien who is physically present in a foreign country or countries for at least 330 full days during any period of 12 consecutive months.



My understanding was something like under 98k was able to be taken in and is tax free to the US govt. Is that still something I have to report or just if it exceeds the 98k?=================>> In general correct aslongas you meet the requirements described above; the maximum amount of the Foreign Earned Income Exclusion under Internal Revenue Code is indexed to inflation (for example,, $92,900 for 2011, $95,100 for 2012, $97,600 for 2013). The amount of foreign earned income or foreign housing costs excluded from your gross income will be used for purposes of determining the rate of income tax and AMT that applies to your nonexcluded income. your tax on any foreign earned income above the exclusion amount and on any unearned income is computed as if the foreign earned income exclusion was not claimed. Your tax will be the excess of the tax that would be imposed if your taxable income were increased by the amount(s) excluded, and the tax that would be imposed if your taxable income were equal to the excluded amount(s). For this purpose, the excluded amount(s) will be reduced by the aggregate amount of any deductions or other exclusions otherwise disallowed. In many cases this will have the effect of increasing your U.S. federal income tax to an amount greater than it would have been under prior law.



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