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Question for the Money Doctors

Question submitted on Mar 23, 2011.

Question

if you are a us citizen and working in different country are you going to pay us taxes?? thx

Answer

As a U. S. citizen, you are subject to U. S. income tax on your worldwide income.   However, a “qualified individual” may exclude “foreign earned income” of up to $92,900 for 2011. 

The Internal Revenue Code Section 911(d)(1) defines the term “qualified individual” as an individual whose tax home is in a foreign country and who is (a) a citizen of the United States and establishes that the individual has been a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire taxable year, or (b) a citizen or resident of the United States who, during any period of 12 consecutive months, is present in a foreign country or countries during at least 330 full days.

Code Section 911(d)(4) provides an exception to the eligibility requirements if the individual left the country during a period for which the Secretary of the Treasury, after consultation with the Secretary of State, determines that individuals were required to leave because of war, civil unrest, or similar adverse conditions that precluded the normal conduct of business.

An individual’s “foreign earned income” includes income received as compensation for performing services.

There is an additional exclusion for foreign housing costs, subject to a separate limitation.


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