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Here's the relevant section explaining that yes, income from a US company is just groovy for use with the Foreign Earned Income deduction: http://www.irs.gov/I

Here's the relevant section explaining that yes, income from a US company is just groovy for use with the Foreign Earned Income deduction: http://www.irs.gov/Individuals/International-Taxpayers/Foreign-Earned-Income-Exclusion---What-is-Foreign-Earned-Income http://www.irs.gov/Individuals/International-Taxpayers/Forei... Source of Earned Income The source of your earned income is the place where you perform the services for which you received the income. Foreign earned income is income you receive for performing personal services in a foreign country. Where or how you are paid has no effect on the source of the income. For example, income you receive for work done in France is income from a foreign source even if the income is paid directly to your bank account in the United States and your employer is located in New York City.

codecamper 12y ago
Interesting! I stand corrected. Next thing I don't understand with that document is what is "earned" income. Are app store sales "earned?" I'd say so... constantly having to update the software -- I'm earning it.
- patio11 12y ago
  Your profits resulting from sales on the App Store (less such expenses as are reasonable and necessary to achieve that income) are, unquestionably, earned income resulting from your personal contribution to a business. http://www.irs.gov/Individuals/What-is-Earned-Income http://www.irs.gov/Individuals/What-is-Earned-Income Most forms of "unearned income" are where you're getting compensated primarily for capital rather than labor. For example, if you were to sell the business, the proceeds from the sale would ordinarily not be earned income. (There are sticky wickets around that question, which you'd want to ask a competent professional adviser about. Any adviser who tells you App Store income is unearned just lost their status as a competent adviser.)
  - codecamper 12y ago
    Yup, it seems that it may be OK for me to claim the Foreign Earned Income Exclusion. Too bad I didn't know about it and stayed too long in the US during 2010-2012. Still... for 2013 and on, I think I can claim it. Last piece of the puzzle is the tax home. I travel from country to country about every 3 months. Do I even have a tax home?
- semperfaux 12y ago
  Is this facetious? Because it's a little funny to expect the IRS to be so literal. In my experience, either it's "earned" in that it's been paid directly to you or it's indirect income (e.g. dividends you were paid on an investment you aren't directly working on or appreciation you haven't collected on) that are still going to be taxed on in one way or another.
  - codecamper 12y ago
    They are incredibly literal in a few cases. Such as: "Professional fees. If you are engaged in a professional occupation (such as a doctor or lawyer), all fees received in the performance of these services are earned income." (great.. special rules for lawyers) But they make up for it by loving artists: "Income of an artist. Income you receive from the sale of paintings you created is earned income." I wish they sit down and analyze software and make some hard & fast rules -- it's the computer age and we are being treated like "writers" or "professionals" or whatnot
oops 12y ago
On that IRS page it says: "For this purpose, foreign earned income is income you receive for services you perform in a foreign country during a period your tax home is in a foreign country and during which you meet either the bona fide residence test or the physical presence test." It sounds like one must also be tax resident in the foreign country for this to work?
- jasonkester 12y ago
  That's right. The other piece of the puzzle is that you have to either show that you're a resident of a foreign country, or that you're physically outside of the USA for 330 days of the year. (as mentioned in the linked article)
  - oops 12y ago
    The IRS page reads as though one must meet both those criteria, not just one of them?
    - masklinn 12y ago
      You must either be a bona-fide resident for an uninterrupted period covering the whole tax year[0] or have been out of the US for at least 330 full days in the year[1] although in the latter case your presence in a foreign country must also be legal according to US law. [0] http://www.irs.gov/Individuals/International-Taxpayers/Foreign-Earned-Income-Exclusion---Bona-Fide-Residence-Test http://www.irs.gov/Individuals/International-Taxpayers/Forei... [1] http://www.irs.gov/Individuals/International-Taxpayers/Foreign-Earned-Income-Exclusion---Physical-Presence-Test http://www.irs.gov/Individuals/International-Taxpayers/Forei...
- seanmcdirmid 12y ago
  Yah, you have to be paying taxes to someone else to take the FEI deduction. Unless you are in a low tax country like Switzerland, Hong Kong, or Singapore, it's just a shortcut in doing your taxes, you don't actually save money since you can always deduct your foreign income taxes if you don't take it.

codecamper 12y ago

Interesting! I stand corrected. Next thing I don't understand with that document is what is "earned" income. Are app store sales "earned?" I'd say so... constantly having to update the software -- I'm earning it.

patio11 12y ago
Your profits resulting from sales on the App Store (less such expenses as are reasonable and necessary to achieve that income) are, unquestionably, earned income resulting from your personal contribution to a business. http://www.irs.gov/Individuals/What-is-Earned-Income http://www.irs.gov/Individuals/What-is-Earned-Income Most forms of "unearned income" are where you're getting compensated primarily for capital rather than labor. For example, if you were to sell the business, the proceeds from the sale would ordinarily not be earned income. (There are sticky wickets around that question, which you'd want to ask a competent professional adviser about. Any adviser who tells you App Store income is unearned just lost their status as a competent adviser.)
- codecamper 12y ago
  Yup, it seems that it may be OK for me to claim the Foreign Earned Income Exclusion. Too bad I didn't know about it and stayed too long in the US during 2010-2012. Still... for 2013 and on, I think I can claim it. Last piece of the puzzle is the tax home. I travel from country to country about every 3 months. Do I even have a tax home?
semperfaux 12y ago
Is this facetious? Because it's a little funny to expect the IRS to be so literal. In my experience, either it's "earned" in that it's been paid directly to you or it's indirect income (e.g. dividends you were paid on an investment you aren't directly working on or appreciation you haven't collected on) that are still going to be taxed on in one way or another.
- codecamper 12y ago
  They are incredibly literal in a few cases. Such as: "Professional fees. If you are engaged in a professional occupation (such as a doctor or lawyer), all fees received in the performance of these services are earned income." (great.. special rules for lawyers) But they make up for it by loving artists: "Income of an artist. Income you receive from the sale of paintings you created is earned income." I wish they sit down and analyze software and make some hard & fast rules -- it's the computer age and we are being treated like "writers" or "professionals" or whatnot

oops 12y ago

On that IRS page it says: "For this purpose, foreign earned income is income you receive for services you perform in a foreign country during a period your tax home is in a foreign country and during which you meet either the bona fide residence test or the physical presence test." It sounds like one must also be tax resident in the foreign country for this to work?

jasonkester 12y ago
That's right. The other piece of the puzzle is that you have to either show that you're a resident of a foreign country, or that you're physically outside of the USA for 330 days of the year. (as mentioned in the linked article)
- oops 12y ago
  The IRS page reads as though one must meet both those criteria, not just one of them?
  - masklinn 12y ago
    You must either be a bona-fide resident for an uninterrupted period covering the whole tax year[0] or have been out of the US for at least 330 full days in the year[1] although in the latter case your presence in a foreign country must also be legal according to US law. [0] http://www.irs.gov/Individuals/International-Taxpayers/Foreign-Earned-Income-Exclusion---Bona-Fide-Residence-Test http://www.irs.gov/Individuals/International-Taxpayers/Forei... [1] http://www.irs.gov/Individuals/International-Taxpayers/Foreign-Earned-Income-Exclusion---Physical-Presence-Test http://www.irs.gov/Individuals/International-Taxpayers/Forei...
seanmcdirmid 12y ago
Yah, you have to be paying taxes to someone else to take the FEI deduction. Unless you are in a low tax country like Switzerland, Hong Kong, or Singapore, it's just a shortcut in doing your taxes, you don't actually save money since you can always deduct your foreign income taxes if you don't take it.