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How do IRS calculate tax on foreign earned income? I know we'll get the first $102,100 tax exemption for 2017. However, how's about the rest if we are in $200k bracket?

Forum|Forum|7 years ago
June 3, 2019
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Are we still allowed to get the child tax credit when we claim that exemption as well? We have 3 kids, and filing jointly [I don't work]. We live abroad however we own a house in US [not rental property], as well as have federal student loan. Can those still be deductible at the end of the year?

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Best answer by RichardK

You report all your income and are allowed all the deduction as are all U.S. citizens and resident aliens, however, if meet the bona fide residency test for tax year 2016 you can exclude foreign earned income up to $101,300.

However, although the foreign income is excluded from income tax, it may be included in adjusted gross income for claiming some deductions and credits.

R

RichardKAnswer

Employee

You report all your income and are allowed all the deduction as are all U.S. citizens and resident aliens, however, if meet the bona fide residency test for tax year 2016 you can exclude foreign earned income up to $101,300.

However, although the foreign income is excluded from income tax, it may be included in adjusted gross income for claiming some deductions and credits.

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prettypass2000Author

Thank you!

B

bine22

Employee

If your foreign earned income is above the exclusion limit, you might be better of using the foreign paid tax credit only (assuming you paid taxes in the foreign country). You should calculate your tax return both ways and see, which is better.

The additional child tax credit is disallowed when filing form 2555.