@TMM322 thank you for your complete response to my questions. What I get thereby :
1. A US person having a foreign tax home ( Dubai) and working for a local entity.
2. Having met the Physical Presence Test ( 330 days away from US in a continuous 12 month test period), she is eligible to exclude the foreign income that falls both within the test period and the tax year under consideration. --- hope this makes sense.
3. Because ( per your explanation), the taxpayer is getting part of her remuneration as wages and the rest as a deposit into an investment account ( shares of the entity ? ), her total remuneration is to be included as Foreign Earned Income ( So it is wages plus this extra bit as wages + housing + COLA etc. etc. ) --- does this make sense ?
4. Absent a totalization agreement between US SSA and the local govt. , the taxpayer is subject to SECA ( same as FICA but at the full 15.3 % because there is no employer participation). Use Schedule-SE. Just make sure that the Schedule-SE has the correct total remuneration entered ( it may not flow from form 2555 that you use for Foreign Earned income Exclusion ). For many the easiest way is to use a Schedule- C -- self-employed --- as the entry point of income and then ( go to Foreign Earned Income Exclusion , ) make sure form 2555 has the same income as Schedule-C. This will result in auto population of Schedule-SE. Just be careful that there is no doubling of the income.
5. Since this way the "Extra bit of income" is being recognized / taxed, the basis of the stocks is established. Thus when she disposes of these , it will be a simple capital gain and tax thereon.
Does this make sense ?
Is there more I can do for you ?
