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I take Foreign Earned Income exemption and inherited money as an annuity lump sum payout. Will lump sum affect FEI exemption eligibility or will I be taxed separately?

Forum|Forum|7 years ago
June 4, 2019
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Best answer by CarolynM

Your inherited annuity does not preclude your FEI exemption, but you will be taxed separately on this income.

Per the IRS

Foreign earned income for this purpose means wages, salaries, professional fees, and other compensation received for personal services you performed in a foreign country during the period for which you meet the tax home test and either the bona fide residence test or the physical presence test. It also includes noncash income (such as a home or car) and allowances or reimbursements.

Source: Page 3 of Foreign Income

C

CarolynMAnswer

Employee

Your inherited annuity does not preclude your FEI exemption, but you will be taxed separately on this income.

Per the IRS

Foreign earned income for this purpose means wages, salaries, professional fees, and other compensation received for personal services you performed in a foreign country during the period for which you meet the tax home test and either the bona fide residence test or the physical presence test. It also includes noncash income (such as a home or car) and allowances or reimbursements.

Source: Page 3 of Foreign Income

B

billsoaresAuthor

Thank you for your response. I plan to have 20% withheld for federal taxes but normally with the FEI exemption I had not been required to pay CA state taxes. Do you recommend I have taxes withheld for that as well?