If I show 68K as the income, when it comes to the calculations at the end, it will ask me to deduct my business expenses and the 1/2 SE tax deduction to reduce my foreign earned income.
So line 44 would be the 1/2 SE deduction + expenses which is roughly 37K, thus I would only be allowed to claim 31K as foreign income exclusion, leaving a balance of 37K income on form 2555, minus the 1/2 SE tax deduction which leaves me at 32K income, which would then be taxed?
This means even though my gross income is less than 100K, I would still be taxed on my net income because I have high expenses?
I am confused.
The examples seem to say you are supposed to show gross income and then on line 44 is when you deduct the expenses and the 1/2 SE tax to get your foreign income exclusion.
I don't know what line the SE income goes on as well, since the first line says wages and salaries. The second line is for businesses that have capital investment, which doesn't apply to me.
