Do you have to claim foreign income?

If you are a U.S. citizen or resident alien, you must report income from sources outside the United States (foreign income) on your tax return unless it is exempt by U.S. law. If you reside outside the United States, you may be able to exclude part or your entire foreign source earned income.

How do I report foreign income on Schedule C?

SE income will be reported on Schedule C which will link to Form 2555 and apply the FEIE. For example, you’re an independent contractor working in Panama for a company in Taiwan. You earn $100,000, which is paid into your personal bank account. You will pay zero income tax because you qualify for the FEIE.

When to exclude income from foreign earned income?

Generally, you are considered to have earned income in the year in which you do the work for which you receive the income, even if you work in one year but are not paid until the following year. This can affect how much income you can exclude in the year in which you earn it, even if you aren’t paid until the following year.

What’s the maximum foreign earned income exclusion for 2015?

For tax year 2015, the maximum foreign earned income exclusion is up to $100,800 per qualifying person. If the individuals are married and both work abroad and meet either the bona fide residence test or the physical presence test, each one can choose the foreign earned income exclusion.

When to submit Form 2555 for foreign earned income exclusion?

Form 2555 must be completed for each tax year you intend to claim the Foreign Earned Income Exclusion. You should complete this form and submit it to the IRS with Form 1040. Like Form 1040, Form 2555 is due on April 15 for most taxpayers.

Do you have to report foreign earned income?

A common misconception about the foreign earned income exclusion is that the excluded income does not need to be reported on a U.S. tax return.