Foreign Earned Income

[Mark Goldberg]

My client made a $80,000 salary while working in UK. For 2 weeks she was in US working for the British Company. Can she exclude the two weeks salary, $3,000, or is this income earned in the US and not eligible for exclusion?

[Chief]

Foreign Income & Domestic Income

My client made a $80,000 salary while working in UK. For 2 weeks she was in US working for the British Company. Can she exclude the two weeks salary, $3,000, or is this income earned in the US and not eligible for exclusion?

Mark see QF 12-22 and IRS Publ 54). Assuming your client is a citizen of US, I would say that she must report that income as taxable income. Is there any way the $3,000 could be construed as income for housing? I doubt it.

[Bird Legs]

Foreign Income

Mark, you might check out Pub. 54. Did client receive a W-2, or equivalent, from the company client worked for? If so, was this 3,000 included in it? If so, I would say that
it could be excluded. However, I am talking off the top of my thick skulled head.

[Bees Knees]

Regulation Section 1.911-3(a) says in part: “…Earned income is from sources within a foreign country if it is attributable to services performed by an individual in a foreign country or countries. The place of receipt of earned income is immaterial in determining whether earned income is attributable to services performed in a foreign country or countries.”

I think that statement makes it clear that the income earned for the 2 weeks the services are NOT performed in a foreign country do not qualify for the exclusion, even though the source of the payment is from a foreign employer.

Another way to look at it is a nonresident alien working for a foreign corporation, comes to the U.S. to work for two weeks. That income would also be subject to U.S. taxes.