Helen is a U.S.citizen and a CPA who moved to London,England,three years ago to work for a British company.This year,she spent the entire year in London and earned a salary of $110,000.How much of her salary will she be allowed to exclude from gross income in the United States?

Question

Quizplus · Accepted Answer

As a U.S. citizen, Helen is still subject to U.S. taxation on her worldwide income. However, there is a Foreign Earned Income Exclusion (FEIE) that allows for a portion of foreign-earned income to be excluded from gross income. For tax year 2021, the maximum exclusion amount is $108,700. Since Helen earned $110,000 in London, she can only exclude up to the maximum amount of $108,700. Therefore, her excluded income would be $105,900 ($108,700 - $2,100). Choice B is the closest answer to this amount.

Helen Is a U