James Lewis <jmpj[at]verizon.net> wrote:

- quote -

She does not qualify for foreign earned income credit, but
she can claim foreign tax credit on Form 1116.

--

ArtKamlet at a o l dot c o m Columbus OH K2PZH

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Wages in Israel go on line 7, Form 1040. Fill out Form 1116,
credt goes on line 47.

Bill

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Wages in Israel go on line 7, Form 1040. Fill out Form 1116,
credt goes on line 47.

Bill

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James Lewis" <jmpj[at]verizon.net> wrote:

- quote -

Unless she was out of the country for more than just the
time she worked in Israel, she would not qualify for the
foreign earned income exclusion -- five months is well short
of the required 330 days.

The money earned, if it was in the form of a salary or
wages, goes on line 7, just as any other salary and wage
income. There is, of course, no W-2 for this entry; the
amount is just added to all other W-2 income. Any payments
made in Israeli currency must be translated to dollars at
the appropriate exchange rate.

She would be eligible for the foreign tax credit so her
return should contain Form 1116 to determine the amount.
Without the full details of her return, it isn't possible to
calculate the credit but is should be sufficient to
eliminate any tax liability.

Lanny K. Williams, CPA
Nawarat, Williams & Co., Ltd.
Income Tax Services for Expatriate Americans

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"James Lewis" <j...[at]verizon.net> wrote:

- quote -

Report the income in the same category as normally would on
the 1040 if earned in the US. You may either take 1116 FTC
or 2555 FIExclusion. If you are taking Foreign Tax (General
Limitations) you will report on Part II of 1116. 2555, you
would not report the foreign tax.

If US Taxes withheld on the US Income, then she may not pay
but otherwise, she does.

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Clients daughter lived and worked in Israel for 5 months in
2006. She made $4000 and paid Israel tax of $1200. Her other
income, being a student, is about $3000 and she is claimed
as a dependent by her parents (still in college).

I've never had a client with foreign earned income. Where do
I report the income and how much of the Israel foreign tax
can she take?

Mike

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