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Topic: Very simple tax questions.....  (Read 1099 times)

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Very simple tax questions.....
« on: April 16, 2008, 08:19:45 PM »
First, are the foreign income exclusions combined if a married couple files?  For example, if one person makes the equivalent of $90,000 and the other makes the equivalent of $10,000, does that mean the total is well under the foreign income exclusion of approximately $170,000, or does each person have individual limits?

Is there any other considerations to the foreign income exclusions, ie children, self employment expenses, etc........

Any easy computer programs that are able to complete the return for you?

Thanks!


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Re: Very simple tax questions.....
« Reply #1 on: April 16, 2008, 08:51:07 PM »
First, are the foreign income exclusions combined if a married couple files?  For example, if one person makes the equivalent of $90,000 and the other makes the equivalent of $10,000, does that mean the total is well under the foreign income exclusion of approximately $170,000, or does each person have individual limits?

Is there any other considerations to the foreign income exclusions, ie children, self employment expenses, etc........

Any easy computer programs that are able to complete the return for you?

Thanks!

Yes - you get two exclusions
TurboTax works for me but, is best to discuss with a tax professional.


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Re: Very simple tax questions.....
« Reply #2 on: April 17, 2008, 09:32:50 AM »
First, are the foreign income exclusions combined if a married couple files?  For example, if one person makes the equivalent of $90,000 and the other makes the equivalent of $10,000, does that mean the total is well under the foreign income exclusion of approximately $170,000, or does each person have individual limits?
Thanks!

Although you both get the exclusion, you must "figure the amount of the exclusion separately for each of you" (page 4 of 2555 instructions).  Therefore you don't have a combined exclusion pot of $171,400 but two separate amounts of $85,700.

This means the spouse making $10,000 would be completely excluded but that the spouse making $90,000 would be over the $85,700.  However, other deductions may help such as the housing deduction.


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Re: Very simple tax questions.....
« Reply #3 on: April 22, 2008, 02:10:19 PM »
Although you both get the exclusion, you must "figure the amount of the exclusion separately for each of you" (page 4 of 2555 instructions).  Therefore you don't have a combined exclusion pot of $171,400 but two separate amounts of $85,700.

This means the spouse making $10,000 would be completely excluded but that the spouse making $90,000 would be over the $85,700.  However, other deductions may help such as the housing deduction.

I am also in the above situation and both exclusions are added to the final calculation on the 1040.  Yes, they do not give a blank 171,400 deduction but, it does add both incomes and excludes up to that amount, regardless of the ratios between the earners. 
It wouldn't make any sense if a couple making 100,000 and 10,000, respectively, to pay more taxes than a couple making 85,700 and 24,300, respectively.



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Re: Very simple tax questions.....
« Reply #4 on: April 22, 2008, 09:10:38 PM »
I am also in the above situation and both exclusions are added to the final calculation on the 1040.  Yes, they do not give a blank 171,400 deduction but, it does add both incomes and excludes up to that amount, regardless of the ratios between the earners. 
It wouldn't make any sense if a couple making 100,000 and 10,000, respectively, to pay more taxes than a couple making 85,700 and 24,300, respectively.



sorry for the misinformation!


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