Foreign Income

[Acownt4it]

TP has a permanent resident card dated 9/7/05., wife is a US citizen. TP is only one who worked. He has income from Germany and US. They moved to the US in October.
My question is if I have to claim any of the foreign income?

[Bird Legs]

Foreign income

Client is filing a U S income tax return, right? Then worldwide income should be reported.
Would there be foreign income tax credit against the tax owed to the U.S.?
This is just off the top of my head and I am tired.

[Acownt4it]

Yes they are filing a US return. He had $12,000 of income in US and $56,000 of income (converted to US $) from Germany. He paid $9,000 (converted) in German taxes.
Do I report the German income and take the foreign tax credit or can he elect to exclude up to $80,000 of foreign income?

To add to the mess they have 4 children under 16.

[Bees Knees]

TTB, page 14-9, "A taxpayer is a U.S. resident if he or she was a lawful permanent resident of the United States at any time."

"As a U.S. citizen or resident alien, one's worldwide income generally is subject to U.S. income tax, regardless of where he or she is living."

The exception would be the foreign earned income exclusion. I would assume the taxpayer was physically present in a foreign country at least 330 full days in a period of 12 consecutive months (since he moved from the foreign country to the U.S. half way through the year). That means he would qualify for a pro-rated exclusion.

[Acownt4it]

thanks

I needed some reassurance I was reading the rules correctly.