Taking advantage of the Foreign Earned Income Exclusion as a US expat

Aug 28, 2017

Today we present you Mark’s story and the Foreign Earned Income Exclusion (FEIE). Mark, a US citizen, recently moved to Ecuador and got a professional 9-V visa/immigration status there. He was still going occasionally making trips to the United States, about 60 days per year.

He had his local Ecuadorian accountant prepare his US tax return. Mark was advised that since he spent less than 330 days in a foreign country, he was not eligible for the Foreign Earned Income Exclusion.

After discussing with him, we found out that Mark had substantial ties with Ecuador. It made him eligible for the Bona Fide Resident Test. We filed an amended tax return claiming a refund of about $10,000.

Bona Fide Residence test

For more information on the kind of ties needed to meet the Bona Fide Residence test, we invite you to check out the free test FEIE.

Thanks to 1040 Abroad’s understanding of these tax issues, he was now at peace and saved thousands of dollars. Now Mark is proud to have the peace of mind that her tax situation has been dealt with correctly while legally minimizing her tax owing.

Many of US citizens living overseas do not owe any taxes to the IRS.

However, it doesn’t mean they don’t have to report their income on Form 1040. Majority of US expats confuse the filing threshold with Foreign Earned Income Exclusion. The latter one doesn’t determine your filing liabilities. It is there to exclude all or part of your foreign-source wages and self-employment income from U.S. federal income tax. Yet you need to file a federal tax return and form 2555 to use Foreign Earned Income Exclusion.

Are you ready to have your own story? Contact Us now to receive your advice and break away from the tax burden.

You are welcome to join our Facebook group, where you can interact with other expats and follow the latest updates on our Facebook page.

HOW American abroad can savemoneyusing the Foreign Earned Income Exclusion

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1. Foreign Tax Credit vs. Foreign Earned Income Exclusion

2. The Additional Child Tax Credit. Get a $1,400 refund!

3.  What happens if I don't file?

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