Tax Law (Questions About Taxes)/form 2555


I have lived in china for a number of years and always filed the foreign earned income(form 2555) as im employed locally in china. Previous years I earned less than the maximum foreign earned income exclusion (example 95,100 for 2012) and the form was easy to fill out. In 2013 I made more (over $120K) than the income exclusion (2013 is $97,600). Does this mean I need to pay taxes on the difference (anything over the $97,600). Previous years I just carried the number over to F1040 as I has no other deductions. It does not explain anywhere what to do if you exceed the $97,600. I have done these forms for a number of years but this year is different

Hi Kurt, income over the exclusion amount is considered taxable income. However, if you have paid any income taxes in China, it is possible that a portion of the U.S. tax may be offset by claiming the foreign tax credit. Below is an article that I have written that explains the Foreign Tax Credit:


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Tax Law (Questions About Taxes)

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Randall Brody, EA, MBA, CCP


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