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Foreign income and the foreign tax credit

SEE 1 Chapter 10 · IRS outline 2A7, 3B4

The United States taxes its citizens and residents wherever they live and wherever they earn. Without relief, a nurse working in Dubai or an engineer in Germany would be taxed twice. The Code offers two big tools: exclude foreign wages, or credit the foreign tax. Lily's cousin Mei works in Singapore, Arjun still has income in India, and Hank holds a fund that pays foreign dividends. Nadia shows Theo how to pick the right tool for each.

In this chapter

1. Worldwide income, currency and tax treaties
2. The foreign earned income exclusion
3. The foreign housing exclusion and deduction
4. The foreign tax credit
5. Foreign gifts, trusts, corporations and funds

This chapter has 5 lessons and 62 practice MCQs with explanations, plus flashcards and a recall sheet.

What this chapter covers

• Foreign earned income and housing exclusions (Form 2555)
• treaties
• foreign tax credit (Form 1116)
• foreign trusts and corporations at a glance

Chapter 9: Rentals, passive losses, K-1 income and PTPs · Chapter 11: IRAs: contributions, basis, Roth and conversions