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Lawyer says that due to foreign tax credit option - we can avoid paying income tax on the first $88,000?

Cambridge, MA |

I earn 100% of my income overseas. I've been looking for a good accountant to do my taxes and came across a guy who says that due to some foreign earnings credit or foreign tax credit - I am allowed to not pay taxes on the first $88,000 (or $85,000 - don't actually remember it). And then anything over it is taxed as usual. That doesn't sound right to me. Anyone heard anything about it? Thanks for the help.

Attorney Answers 1

  1. The exclusion to which you refer is the so-called "Section 911 Exclusion" for foreign earned income. For 2013, the exclusion amount is $97,600. You must meet strict qualifications for the exclusion to apply (residency or physical presence etc.) You need to hire a tax return preparer that is familiar with that foreign earned income exclusion as it requires good understanding in order for you to be sure you comply.

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