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There is much confusion about what constitutes foreign earned income with respect to the residency location, the location where the work or service is performed, and supply of the salary or fee any payment. Foreign residency or extended periods abroad from the tax payer is a qualification to avoid double taxation.

Basically, the internal revenue service recognizes that income earned abroad is taxed from your resident country, and in a position to excluded from taxable income your IRS should the proper forms are filed. The source of the income salary paid for earned income has no bearing on whether is usually U.S. or foreign earned income, rather where process or services are performed (as each morning example of employee discussing the You.S. subsidiary abroad, and receiving his salary from the parent U.S. company out among the U.S.).

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For example, if you cash in on under $100,000 annually, to $25,000 of rental income losses qualify as deductible, you can save thousands of dollars on other income origins through this reduction. However, if you earn over $100,000 a year, this deduction begins to phase out, until it's very completely gone for taxpayers earning $150,000 and above annually.

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