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Comment on The Unofficial Guide to Form 2555 Foreign Income Exclusion by Tyler

Tyler — Wed, 18 Jan 2012 04:29:17 +0000

Hey Alex, I believe you are saying that you would carry your self-employment income from Schedule C to line 20a of Form 2555 and you would be absolutely right. Since the amount carried to line 12 of your 1040 and to line 20a of Form 2555 from line 31 of your Schedule C would be net of all expenses, that issue is already taken care of. Don’t forget that the income is subject to US self-employment tax and that amount from line 31 of Schedule C must be taken to Schedule SE as well. However, if your country of residence has a totalization treaty with the US you would not be subject to the self-employment taxes.

Comment on The Unofficial Guide to Form 2555 Foreign Income Exclusion by Tyler

Tyler — Wed, 18 Jan 2012 04:18:51 +0000

Evy,
Alas, your problem with German unemployment is beyond the scope of my abilities. Generally, it is not considered unemployment for US tax purposes and may or may not be earned income depending upon how the unemployment is done in Germany. I would need to know more about how the German system works but I suspect that it would be included on your return on line 21 and would not be eligible for exclusion under using Form 2555 nor would it be subject to self-employment taxes.

Your self-employment income is much easier to deal with. You would include on a Schedule C of the 1040 and then exclude it using Form 2555. Now, generally you would be need to pay the self-employment tax but Germany has a totalization agreement with the US and so you would carry the income to the Schedule SE but then 0 taxes and mark “Exempt per Totalization Agreement” on the schedule.

Comment on The Unofficial Guide to Form 2555 Foreign Income Exclusion by Tyler

Tyler — Wed, 18 Jan 2012 03:22:12 +0000

I apologize for the long delay in responding and hope that this answer still is of use to you. Generally, taxpayers who are married to foreign nationals and live exclusively abroad tend to file married filing separately. Now, if his wife doesn’t work, doesn’t have any income, and never plans on having any there may be a situation in which it would be advantageous for file joint but most spouses would rather stay away from the madness that is the US tax regime. He can claim his daughter as a dependent if she meets the normal requirements.

Comment on Bankruptcy and Taxes by Taxes in Bankruptcy | Filing Bankruptcy

Taxes in Bankruptcy | Filing Bankruptcy — Sat, 14 Jan 2012 17:39:38 +0000

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Comment on The Unofficial Guide to Form 2555 Foreign Income Exclusion by Sharifah

Sharifah — Sat, 14 Jan 2012 15:06:35 +0000

Tyler,

I came across your site here and reading the Q & A helps. I would appreciate it if you could advice on my situation.
My retired husband gets income as a visiting professor since Jan 2010. For the tax return 2010, we filed our joint return and included the annual foreign income of about $54,996. I have a couple of questions.
1. For 2010 income, eventhough it is said that foreign income less than $91,000 is exempted, however, when we filed our 2010 return through our accountant, we were shocked when we had to pay a higher tax for
year. I’m still confused to know that our tax bracket jumped from 15% to 22% and that resulted in the higher tax payment for 2010.

2. For 2011, my husband continues his visiting professorship until Dec. 2011. However, we came back to the US in May 2011 for family time and flew back to Malaysia to continue visiting professorship in early
September until the end of the year. How do we go about filing our return for 2011?

Sharifah

Comment on Personal Financial Statements by Johnny Maughn

Johnny Maughn — Wed, 11 Jan 2012 07:53:35 +0000

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Comment on The Unofficial Guide to Form 2555 Foreign Income Exclusion by Alex

Alex — Tue, 10 Jan 2012 12:07:08 +0000

Hello Tyler,
Great forum and thank you! I have a question about Form 2555 and accounting for related business expenses as a sole-proprietor/self-employed person: I am a US citizen who has lived abroad for many years and am filing for the first time as self-employed as a consultant. When filing my income subject to FEI do I need to subtract my business expenses off this first before entering this on line 20a? On my 1040 line 7 is empty since I only have self-employment income (correct?) and on 1040 line 12, essentially my self-employement income minus expenses are input as the resulting “Business Income (or Loss)” as per Schedule C (Profit or Loss From Business). In the Instructions for Form 2555 I cannot find anywhere that I would have to reduce the amount of foreign income (consulting fees) with any of the expenses I have made, and if so where or how should I do this. Can you help clarify?
Thanks!

Comment on The Unofficial Guide to Form 2555 Foreign Income Exclusion by Evy

Evy — Mon, 09 Jan 2012 07:10:30 +0000

Hello Tyler,

You’re a Jem! I am a US citizen, a resident of Germany for 23 years.

After 19 years I lost my job and collected unemployment from Germany. Do I have to report this income to the IRS? If yes, can I use form 2555?

During unemployment I started my own consulting business. Just me, no employees. Germany assists people on unemployment who want to start their own business by paying a portion of the unemployment benefit during the first 6-9 months of start up. For this year I have two incomes; part unemployment and part my self employed income earned. What forms do I need to file?

And lastly, can you please explain what it means to “revoke” the foreign income exclusion.

Thank you kindly,
Evy

Comment on The Unofficial Guide to Form 2555 Foreign Income Exclusion by Leslie Clark

Leslie Clark — Sat, 10 Dec 2011 20:45:51 +0000

My Son in law Tony is US Citizen. My daughter & granddaughter are both Canadian Citizens. All 3 reside in Canada. My son-in-law works exclusively in Canada. It has just come to our attention that he must file tax Returns in the US. I have read all the forms, and I am clear on forms 2555 report my income, and 1116, claim my tax credits, (thanks to you) But it is not clear to me, on Form 1040 if Tony can claim his wife and daughter as dependant, as he does on his Canadian Income Tax? And would he be filing jointly? even though my daughter is Canadian? I can’t seem to wrap my head around this one??

Comment on The Unofficial Guide to Form 2555 Foreign Income Exclusion by Pam

Pam — Tue, 06 Dec 2011 06:27:47 +0000

I have just finished their return – thank you so much for your help. Actually I think my daughter in law is OK because she is working on their Asian clients – has been to China 5 or 6 times, Bangladesh, Japan and Hong Kong – so she really is working for them on clients that are located in Asia. I guess I was super conservative when reporting their income and did pay self employment tax on all of the income he made in Vietnam – he wanted to do that. But from what I understand his employer will soon begin withholding Vietnamese payroll taxes on his earnings. I cannot even begin to think of that right now – I will wait for another day!! I do have an accounting background – passed the CPA exam many years ago but the last 25+ years of my life was spent working as controller for a college and I have not kept up with income tax laws and certainly was not at all versed in tax ramifications of working overseas. This has been a learning experience. I am going there to visit them in January. 2011 should be a little more straightforward – they willl qualify as bona fide residents I am almost sure. Thank you again!