Hank is a U.S. citizen and is doing a three to six year assignment as a sales executive in Paris for a French company, which began this year. Hank earned $109,500 working for the French company this year but only lived in France for 340 days (out of 365 days). What amount of Hank's $109,500 salary this year will he be allowed to exclude from gross income in the U.S. (rounded to the nearest one-hundred dollars)?

Question

Quizplus · Accepted Answer

Hank can utilize the foreign earned income exclusion for the portion of his salary earned while living and working abroad. In 2020, the maximum exclusion amount is $107,600. However, since Hank only lived in France for 340 days, his exclusion amount will be prorated based on the number of days he resided in France. Therefore, 340/365 x $107,600 = $100,336 is the maximum exclusion amount that Hank can claim. Since Hank earned $109,500, he will be able to exclude $92,400 ($100,336/$109,500 x $100,000).

Hank Is a U