Question

A US tax nonresident should consider US income sourcing rules because:

a. It determines their eligibility for the foreign earned income exclusion.
b. It affects the taxation of their worldwide income.
c. It helps determine the portion of income subject to U.S. tax.
d. It determines their eligibility for certain tax credits.

Answer 1

A US tax nonresident should consider US income sourcing rules because a. it determines their eligibility for the foreign earned income exclusion, affects the taxation of their worldwide income, and determines their eligibility for certain tax credits.

Step-by-step explanation:

A US tax nonresident should consider US income sourcing rules for several reasons:

1. Eligibility for the foreign earned income exclusion: US income sourcing rules determine whether a nonresident is eligible to exclude certain foreign earned income from US taxation.
2. Taxation of worldwide income: Income sourcing rules affect how a nonresident's worldwide income is taxed in the US. This includes determining which portion of income is subject to US tax.
3. Eligibility for certain tax credits: Income sourcing rules may determine whether a nonresident is eligible for certain tax credits that can help reduce their tax liability.