1099 misc income while abroad question

[Anonymous]

So I have a question that relates to 1099 misc.

I am currently in China working for a US  / China based company that involves teaching english online. They send me a 1099 misc every year and make around 36k but they send money to my US bank account.

I am wondering since I am in China year round, if I qualify to be able to exclude that from U.S. tax? If so how do I do this in Turbo tax? Thanks for any help

[DJS]

If you are a U.S. citizen or a resident alien of the United States and you live abroad, you are taxed on your worldwide income. It doesn't matter where your money is deposited. However, you may qualify to exclude from income up to an amount of your foreign earnings that is adjusted annually for inflation. 

For 2019, the maximum exclusion is $105,900 per taxpayer (future years indexed for inflation). In addition, your may exclude housing expenses in excess of 16% of this maximum ($46.42 per day in 2019) but with limits.

The exclusion is available only for wages or self-employment income earned for services performed outside the U.S. The exclusion is claimed on IRS Form 2555.

To qualify for the exclusion, the taxpayer's tax home must be outside the U.S. In addition, the taxpayer must meet either of two tests:

• Bona fide resident test: the taxpayer was a bona fide resident of a foreign country for a period that includes a full U.S. tax year, or
• Physical presence test: the taxpayer must be physically present in a foreign country (or countries) for at least 330 full days in any 12-month period that begins or ends in the tax year in question.

The bona fide residence test is not available to a resident alien, unless he/she is a citizen or national of a country with which the United States has an income tax treaty in effect. Further, the test is not met if the taxpayer declares to the foreign government that they are not a tax resident of that country. Such declaration could be on visa applications or tax returns, or imposed as a condition of a visa. Eligibility for the exclusion may be affected by some tax treaties.

If you pay taxes taxes in China you can choose each tax year to take the amount of any qualified foreign taxes paid or accrued during the year as a foreign tax credit or as an itemized deduction. You can change your choice for each year's taxes. See: https://www.irs.gov/individuals/international-taxpayers/foreign-tax-credit-choosing-to-take-credit-o...