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  • Writer's pictureHolly Roundtree CPA

2019 – 07/26

Eligible taxpayers who live and work outside the U.S. may be able to exclude foreign-earned income from their gross income. To qualify, a taxpayer must have a tax home in another country, not have an abode in the U.S., and be present in a foreign country at least 330 days in 12 consecutive months. After serving in Afghanistan, one military member traveled to Arizona to live with her family in 2011. Later in 2011 and 2012, she again worked overseas at times. On tax returns for both years, she excluded her foreign earned income. The IRS disallowed the exclusions because her abode was still in the U.S. The U.S. Tax Court agreed and added a penalty for understated income. (TC Memo 2019-87)

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