Foreign Income Exclusion - What is Foreign Income?
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New Member

Foreign Income Exclusion - What is Foreign Income?

I am living abroad and, but my employer is in the USA, and I get checks deposited in the US Bank. Can I claim Foreign Income Exclusion? 

 

I am not sure what foreign income is.  Is it when the company is in a foreign country or is it still applicable when it is in the USA? 

2 Replies
Level 15

Foreign Income Exclusion - What is Foreign Income?

First, it is the foreign earned income exclusion.  Unearned income (interest, dividends, passive rental income) is not eligible for the exclusion.)

 

Your income is foreign earned income if you are living overseas when you performed the work for which you were paid, regardless of where the payer is located.

https://www.irs.gov/individuals/international-taxpayers/foreign-earned-income-exclusion

 

https://www.irs.gov/individuals/international-taxpayers/foreign-earned-income-exclusion-what-is-fore...

 

You also have to meet certain other requirements. 

*Answers are correct to the best of my ability at the time of posting but do not constitute legal or tax advice.*
Level 3

Foreign Income Exclusion - What is Foreign Income?

If you meet all tests it doesn't matter if your employer is a US company, and deposits your pay in US bank. Here are rules:

 The tax home must be in a foreign country, and

• The taxpayer must have foreign earned income, and

• The taxpayer meets either the bona fide residence test or the physical presence test. 

If you are unfamiliar with these terms, I suggest you see a tax professional, as there are additional considerations.

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