“If you are a U.S. citizen or a resident alien of the United States and you live abroad, you are taxed on your worldwide income. However, you may qualify to exclude from income up to an amount of your foreign earnings that is adjusted annually for inflation ($97,600 in 2013, $99,200 in 2014, $100,800 in 2015, and $101,300 in 2016). In addition, you can exclude or deduct certain foreign housing amounts.” (Please visit the IRS website for more information.)
If you are being audited, you may have lost this right, but if you are amending your returns voluntarily you are still able to claim this exclusion.
According to the tax code, even if you don’t owe taxes you must still file if your earnings exceed the IRS filing threshold.
Yes and No. The exclusion applies only for federal income taxes but you must still pay for self employment taxes such as medicare and social security.
No. It only applies to earned income.