Question

"helen is a u.s. citizen and cpa, who moved to london, england three years ago to work for a british company. this year, she spent the entire year in london and earned a salary of $110,000. how much of her salary will she be allowed to exclude from gross income in the u.s.?"

Answer 1

Helen can use the Foreign Earned Income Exclusion to exclude up to the maximum allowed (approximately $108,700 as of 2022) from her U.S. taxable income. She must file a U.S. tax return and claim the exclusion with the appropriate forms. Any income above the exclusion limit is subject to U.S. taxes, and she may be eligible for a foreign tax credit.

Step-by-step explanation:

Helen, a U.S. citizen and CPA working in London, will need to contend with the rules of U.S. taxation for citizens living abroad. Under the Foreign Earned Income Exclusion (FEIE), U.S. citizens may exclude a certain amount of foreign-earned income from their U.S. taxable income if they meet the physical presence test or the bona fide residence test. As of 2022, the maximum exclusion amount is approximately $108,700. However, since tax laws can change and this figure is adjusted annually for inflation, Helen should verify the current year's exclusion limit with the IRS or a tax professional.

To claim the FEIE, Helen would need to file a U.S. tax return and report all her income worldwide, then specifically claim the exclusion by filing Form 2555 or Form 2555-EZ. Assuming Helen's financial matters are more complex due to living abroad, she would likely need to file a more comprehensive tax form rather than the 1040EZ.

Any salary amount above the FEIE limit would remain part of Helen's gross income and be subject to U.S. income tax according to the prevailing rates. Moreover, she may also be subject to tax in the UK, and may be eligible for a foreign tax credit to avoid double taxation. It is highly recommended that Helen consult with a tax professional who is knowledgeable in expatriate tax issues to ensure compliance with both U.S. and UK tax laws.

Answer 2

Exclusion upto $103,900. Taxable amount is $6100.

Step-by-step explanation:

US natives, just as changeless occupants, are required to document ostracize expense forms with the government consistently paying little mind to where they dwell.

Alongside the common assessment form for money, numerous individuals are likewise required to present an arrival revealing resources which are held in ledgers in remote nations. Notwithstanding where you live, you should record expat imposes in the US.