Foreign Income Options Hello, I have a question regarding my eligibility for either the Foreign Earned Income Exclusion, or the Foreign Tax Credit.
First to understand my confusion, you must know the following:
I was employed in a foreign company for 2 years, but still maintained employment by the parent company in the USA. Therefore, my income was split from the two sources. I was a resident of the foreign country during that period, however, and maintained a bank account and rented an apartment there. Then, in November of 2014 I returned to the USA and left my foreign job, receiving my full income from the USA for the last two months of the year.
OK, now, to qualify for the better option, the Foreign Earned Income Exclusion, I understand my tax home must be the foreign country. This was true when filing taxes for 2013, as I had spent the entirety of 2013 in the foreign country. However, now that I have returned, it seems the USA is my tax home, even though the foreign country was my tax home for the entire time I was receiving income there. Am I right in understanding I can't claim the Foreign Earned Income Exclusion?
Next, the Foreign Tax Credit seems like a good option, and one that I definitely qualify for. However, I am unsure as to what qualifies as foreign taxes. For example, in the country in question, I am taxed a certain percentage for general taxes, several percent for mandatory healthcare, and several percent for their version of Social Security. Can I claim all of those for the foreign tax credit, or only the first category?
Any help you can provide would be greatly appreciated, and if you have suggestions of ideas I'm not aware of I'd very much so appreciate those, too. Thanks!
P.S. when converting foreign currency to dollars, do I need to somehow look up the exchange rate of those currencies when I was paid it, or can I just use the current rate? Is there an particular institution I must use to determine the exchange rate? Thanks! |