aslongas you meet the requirements for feie, you may exclude the whole of $66k.basically, as you can see, even if you are residing outside the USor have dual citizenship, you are still subject to U.S. federal income tax and reporting on your worldwide income that you earn inngermany. both U.S. domestic tax law and U.S. tax treaties contain a number of provisions that are designed to prevent double taxation, or taxation on the same income in both countries. Domestic law provisions include the foreign earned income exclusion : To qualify for the exclusion, you'll need to meet :You must work and reside outside the U.S. and meet either the bona fide resident or physical presence test.If you do, you're eligible to exclude up to $104,100 in foreign earned income for the 2018 tax year. The amount of the exclusion often increases each year. You're considered a bona fide resident of a foreign country if you reside in germany for "an uninterrupted period that includes an entire tax year." A tax year is Jan 1 through Dec 31, so the qualifying period for the bona fide residence test must include one full calendar year. You're considered physically present in germany if you reside there for at least 330 full days in any consecutive 12-month period. Choosing any consecutive 12-month period to qualify for the foreign earned income exclusion under the physical presence test means that you may have to spread the exclusion amount over two tax years. You might also qualify for a pro-rated exclusion if you intended to meet all the time requirements you may use the number of days you were physically present in germany during the tax year to pro-rate the maximum exclusion.You may have to pro-rate the maximum exclusion in a year.when you claim the foreign earned income exclusion, you will pay US income tax at the rate that would have applied had you not claimed the exclusion. In other words, the US fed income tax is calculated by first figuring the amount of income tax on your total income(both from germany and from US) before taking the foreign earned income exclusion.then, You need to subtract the tax as calculated on the amount of foreign earned income that is excluded. The result is your federal income tax liability amount. |