How does the IRS find out about foreign income?

How does the IRS find out about foreign income?

How do you know the IRS will find my foreign bank account? The Foreign Account Tax Compliance Act, better known as FATCA, was passed in 2010 as part of the HIRE act. The IRS will know you have a foreign bank account because your bank will tell the IRS you have a foreign bank account every year starting in 2015.

What qualifies as foreign earned income?

Foreign-earned income: Foreign-earned income means wages, salaries, professional fees, or other amounts paid to you for personal services rendered by you. The excluded amount will reduce your regular income tax but will not reduce your self-employment tax.

Do I have to report foreign earned income?

If you are a U.S. citizen or resident alien, you must report income from sources outside the United States (foreign income) on your tax return unless it is exempt by U.S. law. If you reside outside the United States, you may be able to exclude part or your entire foreign source earned income.

Who qualifies for foreign earned income exclusion?

To be eligible for the foreign income exclusion, an expatriate must meet all four of the following requirements:

• Must have foreign earned income.
• Must have a tax home in a foreign country.
• Meet either the bona fide residence test or physical presence test.
• Make a valid election to exclude foreign earned income.

What is foreign earned income exclusion 2019?

For the 2019 tax year, the limit is $105,900. The Foreign Earned Income Exclusion 2020 maximum amount has risen to $107,600—which means that the first $107,600 of your foreign earned income can be excluded from taxation. In 2021, the exclusion amount increases to $108,700.

What housing expenses are excluded from income?

You must have qualified housing expenses – Qualified foreign housing expenses include the following: rent, utilities (except for telephone, TV services, and internet), personal property insurance (such as homeowner’s or renter’s insurance), leasing fees, furniture rental, parking rental, and repairs.

What is the foreign earned income exclusion for 2020?

$107,600