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tax question regarding foreign income exclusion
Posted on 3/25/15 at 9:36 pm
Posted on 3/25/15 at 9:36 pm
Can someone dumb this down like I'm 5 years old?
Example:
Joe has a 100k a year salary. He works in Mexico the entire year while his company is based in the usa.
So he gets to skip out on personal income tax but pays social security and Medicare?
Is this right?
In my example, how much federal tax is Joe paying?
Example:
Joe has a 100k a year salary. He works in Mexico the entire year while his company is based in the usa.
So he gets to skip out on personal income tax but pays social security and Medicare?
Is this right?
In my example, how much federal tax is Joe paying?
4
Posted on 3/25/15 at 9:55 pm to I Love Bama
You can exclude up to around ~100k in foreign earned income as an expat. So yes in your case he wouldn't have to pay personal income taxes.
Posted on 3/26/15 at 1:34 pm to I Love Bama
I think You only get so many days back in the USA per year before the no tax things begins to erode away
Posted on 3/26/15 at 1:42 pm to lsugradman
quote:
So yes in your case he wouldn't have to pay personal income taxes.
But still pays SS and Medicare tax correct? Any other taxes?
Posted on 3/26/15 at 2:01 pm to I Love Bama
I have not seen a situation (note, I don't do a lot of ex pat work, maybe a few a year) in which Fica and medicare tax were withheld on an expat salary.
Posted on 3/26/15 at 9:14 pm to I Love Bama
quote:
But still pays SS and Medicare tax correct? Any other taxes?
Yes, I still pay SS and Medicare tax. No other taxes that I know of. I pay state income tax because LA is my home base.
Posted on 3/28/15 at 12:13 pm to lsugradman
So LA is considered your tax home?
All my clients that have foreign earned income are considered residents of that particular country...so they pay Fed tax on any amounts above and beyond the exclusion and Foreign tax credit.
All my clients that have foreign earned income are considered residents of that particular country...so they pay Fed tax on any amounts above and beyond the exclusion and Foreign tax credit.
Posted on 3/28/15 at 1:01 pm to lsugradman
quote:
I pay state income tax because LA is my home base.
On the money above and beyond the foreign income exclusion? Or on all of it?
Posted on 3/28/15 at 1:29 pm to LSUFanHouston
quote:
On the money above and beyond the foreign income exclusion? Or on all of it?
You will pay state taxes on ALL of it. I was unaware of this and it major screwed me when I worked overseas.
I shoulda filed with my dad's address in Texas and I wouldn't have had to pay the state of Louisiana $7+K
Posted on 3/28/15 at 6:18 pm to FootballNostradamus
quote:
I wouldn't have had to pay the state of Louisiana $7+K
How hard did you fight that? I can see LA saying you were domiciled in LA. However, LA is also an Federal AGI state, and I am not aware of any provision that is an add-back for foreign earned income in Louisiana.
To put it bluntly, I would have asked the agent... exactly where do I list this income on the LA return?
Posted on 3/29/15 at 11:24 am to I Love Bama
quote:
But still pays SS and Medicare tax correct? Any other taxes?
No, you are not required to pay SS or Medicare if working outside of the US.
Income tax liability itself is determined by how many total days spent outside the US.
I am not an accountant but have worked overseas for years and this has been the process through several different companies and accounting services.
Posted on 3/29/15 at 12:18 pm to LSUFanHouston
quote:
How hard did you fight that? I can see LA saying you were domiciled in LA. However, LA is also an Federal AGI state, and I am not aware of any provision that is an add-back for foreign earned income in Louisiana.
To put it bluntly, I would have asked the agent... exactly where do I list this income on the LA return?
I don't know all the technical terms, but I fought it like crazy. Hired a CPA and everything. They said me keeping my drivers license or something required me to file it as earned income.
Posted on 3/29/15 at 8:03 pm to krehn11
quote:
So LA is considered your tax home?
All my clients that have foreign earned income are considered residents of that particular country...so they pay Fed tax on any amounts above and beyond the exclusion and Foreign tax credit.
LA is considered my tax "home" in the US because that's the last place I lived and where I have an address and DL. That is only for state income tax purposes.
I am a resident of Indonesia and live outside the US for more than 330 days so I only pay Fed tax on income above the foreign earned income exclusion.
Posted on 3/30/15 at 4:22 pm to I Love Bama
I've been working out of the country since 2001 and have used the foreign income exclusion since then.
If you were in Mexico working for 330 days or more you can get the full $99,200 exclusion. You need to use form 2555.
If your company paid foreign taxes for you in Mexico you can also get a break there. You would need form 1116.
I use Stronjy & Stronjy (Jane Stronjy) to do my taxes. She is good and only charges about $400. But it's worth every penny. Just google and give her a call.
If you were in Mexico working for 330 days or more you can get the full $99,200 exclusion. You need to use form 2555.
If your company paid foreign taxes for you in Mexico you can also get a break there. You would need form 1116.
I use Stronjy & Stronjy (Jane Stronjy) to do my taxes. She is good and only charges about $400. But it's worth every penny. Just google and give her a call.
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