Income from another Country

[shellatbeach]

My son started working in S. Korea on May 1, 2021 and will continue until July 31, 2022 at which time he will return to the U.S.

His employer filed his taxes in S. Korea, on his behalf.  

We received a statement of income and taxes paid on that income from his employer.

Does he have to include this income in his 2021 U.S. tax return?  If so, how?

Does this mean he will also pay U.S. taxes on this foreign income?

[ErnieS0]

Possibly. US citizens are taxed on worldwide income. However there is a foreign earned income exclusion for a US citizen or 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.

You will wait until son meets the 330 day test before filing, which would be in March.

See Foreign Earned Income Exclusion

You can claim a foreign tax credit or deduction for any income not covered by the foreign earned income exclusion,

Sometimes it is better to NOT claim the exclusion and choose the tax credit. You can try it both ways in TurboTax.

To enter income from South Korea and claim the exclusion:

1. Type foreign income in Search in the top right
2. Select Jump to foreign income and follow the screens

To claim a foreign tax credit or deduction

1. Type "foreign tax credit" in Search in the upper right
2. Select "Jump to foreign tax credit"
3. Complete the screens to claim either the credit or deduction

For more help: Where do I enter the foreign tax credit (Form 1116) or deduction for 2020?

[shellatbeach]

Thank you for clarifying that it is 330 consecutive days.

We will hold off filing until the end of March.

This will take care of the 2021 tax filing year.  What about 2022?  Since he is currently still working in S. Korea until July 31, 2022.  Can he receive the foreign earned income exclusion again in the 2022 tax filing year?

[Vanessa A]

Yes, if he continues to meet the 330 days during the 12 month period prior to when you file, he can receive the foreign earned income exclusion for 2022. 

[shellatbeach]

Thanks for your help.