Reply To: Foreign Income exclusions –> interest income

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#3271
kaneohe
Participant

I was thinking the same thing but I got reminded by one article that the FEIE does not simply remove the FEI. I’ll have to search for that article but I think the way it works is you do two calculations:
1) FEI only tax
2)( FEI plus other income) tax
3)subtract 1) from 2) ; this keeps the other income suspended at the higher tax rates. I guess I’m assuming here that your FEI > deductions.

https://www.irs.gov/individuals/international-taxpayers/foreign-earned-income-exclusion

“Figuring the tax: Beginning with tax year 2006, a qualifying individual claiming the foreign earned income exclusion, the housing exclusion, or both, must figure the tax on the remaining non-excluded income using the tax rates that would have applied had the individual not claimed the exclusions.”

  • This reply was modified 2 years, 4 months ago by kaneohe.