
Originally Posted by
Melonie
^^^ the Yahoo piece wasn't clear about the details. It IS true that a US citizen living abroad can exempt up to $97k of their foreign income from US federal and state income taxes via the 'foreign income exclusion'. In point of fact, it's actually $106k since the IRS allows 'adjustments' to the foreign income earned. However, to qualify for that IRS 'foreign income exclusion' ...
(snip)To claim the foreign earned income exclusion, the foreign housing exclusion, or the foreign housing deduction, you must have foreign earned income, your tax home must be in a foreign country, and you must be one of the following:
•A U.S. citizen who is a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year,
•A U.S. resident alien who is a citizen or national of a country with which the United States has an income tax treaty in effect and who is a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year, or
•A U.S. citizen or a U.S. resident alien who is physically present in a foreign country or countries for at least 330 full days during any period of 12 consecutive months."(snip)
While I make sure that I personally qualify for the 'foreign income exclusion' by strictly limiting my return visits to US soil to less than 35 days per year, the OP cannot qualify for this tax year since she didn't move to the UK until April. Thus the IRS / Cal FTB is going to attempt to tax ALL of her UK income earned through December 31st as if it was earned in the USA ... less tax credits subtracting dollar for dollar against taxes paid to UK HM revenue on her UK income.
Next year, providing the OP remains outside the USA for 330 days, she'll be able to exclude the first $106,000 of her UK income from US / California taxes.
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