Foreign earned income for this purpose means wages, salaries, professional fees, and other compensation received for personal services you performed, such as self-employment income, in a foreign country during the period for which you meet the Tax Home Test, and either the Bona Fide Residence Test or the Physical Presence Test. It also includes noncash income (such as a home or car) and allowances or reimbursements.
What is not considered Foreign Earned Income?
- Amounts that are actually a distribution of corporate earnings or profits rather than a reasonable allowance as compensation for your personal services.
- Pension and annuity income (including social security benefits and railroad retirement benefits treated as social security).
- Interest, ordinary dividends, capital gains, alimony, etc.
- Amounts paid to you by the U.S. Government or any of its agencies if you were an employee of the U.S. Government or any of its agencies.
- Amounts you must include in gross income because of your employer’s contributions to a nonexempt employees’ trust or to a nonqualified annuity contract.
How do I report Foreign Earned Income other than wages?
If the income is form self-employment, you would report it on a Schedule C. The Schedule C may be excludable as Foreign Earned Income, but self-employment tax is still due on self-employment earnings no matter where they are earned. If the income is the fair rental value of company-owned housing furnished to you, report it as Foreign Earned Compensation.
To add Foreign Earned Income within the program, go to:
- Federal section
- Income (Select my forms)
- Less Common Income
- Other Compensation
- Foreign Earned Compensation