Jeremy,an American citizen,earned $200,000 during 2015 while employed in Switzerland.Jeremy is entitled to the maximum foreign-earned income exclusion.Jeremy also incurred $40,000 of deductible expenses attributable to the foreign-earned income.Jeremy may deduct how much in expenses?

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Quizplus · Accepted Answer

The maximum foreign-earned income exclusion for tax year 2015 is $100,800. Therefore, Jeremy can exclude this amount from his taxable income. His taxable income would then be $99,200 ($200,000 - $100,800). He can deduct his foreign-earned income attributable expenses up to the amount of his foreign-earned income exclusion, which is $100,800. Therefore, he can deduct $19,840 ($100,800 - $80,960) in expenses.

Jeremy,an American Citizen,earned $200,000 During 2015 While Employed in Switzerland