Foreign Earned Income & Foreign Earned Income Exclusion
Question: What is foreign earned income? Is it income paid by a foreign person for working abroad, or is it income paid by a U.S. company for working abroad?
Earned income is pay for personal services performed, such as wages, salaries, or professional fees. Foreign earned income is income you receive for services you perform in a foreign country or countries.
To qualify for the foreign earned income exclusion:
- Your tax home must be in a foreign country; and
- You must meet either the bona fide residence test or the physical presence test.
- It does not matter whether earned income is paid by a U.S. employer or a foreign employer.
Foreign earned income does not include the following amounts:
- The previously excluded value of meals and lodging furnished for the convenience of your employer.
- Pension or annuity payments including social security benefits.
- Payments by the U.S. Government, or any U.S. government agency or instrumentality, to its employees.
- Amounts included in your income because of your employer's contributions to a nonexempt employee trust or to a non-qualifying annuity contract.
- Recaptured unallowable moving expenses.
- Payments received after the end of the tax year following the tax year in which you performed the services that earned the income.
- Form 2555 (PDF), Foreign Earned Income
- Form 2555-EZ (PDF), Foreign Earned Income Exclusion
- Publication 514, Foreign Tax Credit for Individuals
- Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad
- Form 1116 (PDF), Foreign Tax Credit
Category: U.S. Aliens and Citizens Living Abroad
Subcategory: Foreign Earned Income & Foreign Earned Income Exclusion