Question

eBook Calculator Exercise 5-21 (Algorithmic) (LO. 2) Mio was transferred from New York to Germany. He lived and worked in Germany for 351 days in 2020. Mio's salary for 2020 is $284,800. 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? ох Feedback Check My Work The United States uses a global tax system as opposed to a territorial system. Under this global system, a U.S. citizen is generally subject to tax on his or her income regardless of its economic origin. Previous Next Check My Work a A do 642 PM 9/21/2020

Answer 1

Answer-

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.

Mio has live in Germany for 351 days out of 366 days which amounts to 95.90% (351/366)

Thus the amount of foreign earned income exclusion allowed to Mio = $107,600 * 95.90% = $103,188

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