On November 18, 2013, the IRS announced that the foreign earned income exclusion amount under §911(b)(2)(D)(i) is going to be $99,200 for tax year 2014. This up from $97,600 in 2013 and $95,100 in 2012.
Generally, if a qualified individual meets certain requirements of I.R.C. §911, he may exclude part or all of his foreign earned income from taxable gross income for the U.S. income tax purposes. This income may still be subject to U.S. Social Security taxes.
Remember, if your overseas earnings are above $99,200 for the tax year 2013, then you may be subject to U.S. income taxation on the excess amount (i.e. amount exceeding the 2014 foreign earned income exclusion).
It is also important to note, despite the income tax exclusion, your tax bracket will still be the same as if you were taxed on the whole amount (i.e. as if you had not claimed the foreign earned income exclusion). For most U.S. expatriates, this means that the tax bracket is likely to start at 25% or higher. If you are self-employed, however, your situation may differ from this description.
Furthermore, it is worth noting that additional amount of earnings may also be excluded under the foreign housing exclusion.
Contact Sherayzen Law Office For Foreign Earned Income Exclusion Legal Help
If you are a U.S. taxpayer living abroad or you are planning to accept a job overseas, contact us to discuss your tax situation. Our experienced tax law office will guide you through the complex maze of U.S. tax reporting requirements, help you make sure that you are in full compliance with U.S. tax laws, and help you take advantage of the relevant provisions of the Internal Revenue Code to make sure that you do not over-pay your taxes in the United States.