Want to know if my Foreign Income is still treated the same

[zwibrahim]

For 2015, I lived overseas the entire year and was paid by a foreign employer. However, in 2016 I lived in the United States the entire year but was still employed and paid by the same employer via wire transfers to my US bank account. Is that still considered Foreign Income and qualifies under Foreign Earned Income Exclusion (2555-EZ) or no?

[Anita01 · Accepted solution]

In order to claim the exclusion, you would have to be living in a foreign country.

"Foreign Earned Income Exclusion - Requirements

To claim the foreign earned income exclusion, the foreign housing exclusion, or the foreign housing deduction, you must have foreign earned income, your tax home must be in a foreign country, and you must be one of the following:

• A U.S. citizen who is a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year,
• A U.S. resident alien who is a citizen or national of a country with which the United States has an income tax treaty in effect and who is a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year, or
• A U.S. citizen or a U.S. resident alien who is physically present in a foreign country or countries for at least 330 full days during any period of 12 consecutive months."

[zwibrahim]

If I'm a citizen of that country as well and pay income taxes on that income in that country, does that change anything?

[bine22]

It's not considered foreign earned income anymore. You have to check, if you are really liable for taxes in that foreign country, and if that is a true liability AND there is a tax treaty with that country with a clause against double taxation, you might be able to claim that treaty and a credit against the taxes paid in the foreign country, but Turbotax does not support tax treaties.

[zwibrahim]

Oh I see. I just checked and there are no tax treaties with that country. I did check with a CPA there and he informed me that I am able to get a tax break in that country so I only pay taxes on that income here in the US. Great news.