Question

1-1 Mio was transferred from New York to Germany. He lived and worked in Germany for 340 days in 2020. Mio's salary for 2020 is $190,000.

Assume a 366-day year. In your computation, round any division to four decimal places before converting to a percentage. For example, 0.473938 would be rounded to 0.4739 and converted to 47.39%. If required, round your final answer to the nearest dollar.

What is Mio's foreign earned income exclusion?

1-2 Mio was transferred from New York to Germany. He lived and worked in Germany for 343 days in 2020. Mio's salary for 2020 is $225,600.

Assume a 366-day year. In your computation, round any division to four decimal places before converting to a percentage. For example, 0.473938 would be rounded to 0.4739 and converted to 47.39%. If required, round your final answer to the nearest dollar.

What is Mio's foreign earned income exclusion?

Answer 1

A taxpayer is allowed to deduct $107,600 of the foreign earnings if it meets any of the two tests.

• Bonafide Residence Test - Has been a resident of a foreign country for an entire year
• Physical Presence Test - The tax payer has been physically present in the foreign country for atleast 330 days out of 12 consecutive month period.

When a taxpayer is has stayed for less than a year, the exclusion amount shall be allowed proportionately.

Required a)

Mio has live in Germany for 340 days out of 366 days which amounts to 92.90% (340/366)

Thus the amount of foreign earned income exclusion allowed to Mio = $107,600 * 92.90% = $99,960

Required b)

Mio has live in Germany for 354 days out of 366 days which amounts to 96.72% (354/366)

Thus the amount of foreign earned income exclusion allowed to Mio = $107,600 * 96.72% = $104,071

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