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Level 1

if income is earned abroad is it obligatory to use FEIE?

If income is earned abroad is it obligatory to use FEIE?

My income is far from the maximum allowed and by using FEIE my EIC (or CTC) is eliminated. Can I claim Foreign earned income in another way as I don't need it to reduce taxable income it seems. I pass the Bona Fida residence test. 

My main concern is that I have 4 (children) dependents and so I would like to be able to claim or earn a refund from this. The income that I earned is below 40, 000 USD. 

So, can I list my foreign earned income in another way? There is no W-2 nor a form 1099 available from the foreign employer.

4 Replies
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Level 15

if income is earned abroad is it obligatory to use FEIE?

You have the option to take the exclusion OR the credit ... Choose the credit.
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Level 1

if income is earned abroad is it obligatory to use FEIE?

How/where do I report the earnings as there was no company supply w-2. If I select the option not to use FEIE TurboTax takes the info/amount off the misc. W-2. So what’s best way to report this income as foreign earned?
Also, I cannot use foreign tax credit because the country I’m working in doesn’t charge/assess taxes.
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Level 1

if income is earned abroad is it obligatory to use FEIE?

I'm not aware of any obligation to use either the FEIE or the Foreign Tax Credit. Given your situation with 4 kids, using the FEIE automatically disqualifies you from claiming the refundable Additional CTC. You are most likely better off not excluding any foreign income. If you don't exclude your income as foreign income, your tax liability will most likely be eliminated with the CTC and you would receive a check for your eligible ACTC. There is not a requirement to live in the U.S. to claim these credits.

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Expert Alumni

if income is earned abroad is it obligatory to use FEIE?

If you claim Foreign Tax Credit instead of the Foreign Earned  Income Exclusion, then the Child Tax Credit may still lead to a refund. 

 

However, if you DO NOT take the foreign earned income exclusion this year (with or without the foreign tax credit) you in effect are revoking the foreign earned income exclusion and you must wait 6 year to be able to use it again.

 

According to the IRS: Once you choose to exclude your foreign earned income and/or your foreign housing costs, that choice remains in effect for that year and all later years unless you Revoke it.  See Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad for instructions on how to revoke the election and the associated effects.

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