Question

George is a U.S. citizen who is employed by Hawk Enterprises, a global company. Beginning on June 1, 2021, George began working in London (for a total of 214 days in 2021). He worked there until January 31, 2022, when he transferred to Paris. He worked in Paris the remainder of 2022. His salary for the first five months of 2021 was $100,000, and it was earned in the United States. His salary for the remainder of 2021 was $175,000, and it was earned in London. George's 2022 salary from Hawk was $300,000, with part being earned in London and part being earned in Paris. Assume the 2022 indexed amount is the same as the 2021 indexed amount. Assume 365 days in 2021 (a leap year) and 365 days in 2022.

a. Is George eligible for the foreign income exclusion for 2021 and/or 2022? Both years Feedback Check My Work Congress has provided alternative forms of relief from taxes on foreign earned income. The taxpayer can elect either (1) to include the forei income in his or her taxable income and then claim a credit for foreign taxes paid or (2) to exclude the foreign earnings from his or her U.S. income (the foreign earned income exclusion). Carry any fractions out to four decimal places. Round your final answers to the nearest dollar.
b. Determine George's gross income in 2021 and 2022 2021: $ 212,086 X 2022: $ 192,400 X.

Answer 1

George is eligible for the foreign income exclusion for 2021, but eligibility for 2022 cannot be determined. His gross income for 2021 is $212,086 and for 2022 is $192,400.

Step-by-step explanation:

George is eligible for the foreign income exclusion for both 2021 and 2022.

For 2021, George worked in London for a total of 214 days, which is more than the requirement of being present in a foreign country for at least 330 days in a 12-month period. Therefore, George meets the physical presence test and is eligible for the foreign income exclusion for his salary earned in London in 2021.

For 2022, George worked in both London and Paris. Since his salary was earned in both countries, he needs to calculate the housing expense limitation to determine his foreign earned income exclusion. If George's housing expenses exceed a certain amount, he may need to include a portion of his salary in his taxable income. However, since the 2022 indexed amount is assumed to be the same as 2021, and the details of George's housing expenses are not provided, we cannot determine his eligibility for the foreign income exclusion for 2022.

Therefore, based on the information provided, George is eligible for the foreign income exclusion for 2021, but we cannot determine his eligibility for 2022.

George's gross income for 2021 is $212,086 and for 2022 is $192,400.