Jeremy,an American citizen,earned $200,000 during 2014 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?

Question

Quizplus · Accepted Answer

The maximum foreign-earned income exclusion for 2014 was $99,200. Deducting this amount from Jeremy's foreign earned income of $200,000 leaves him with $100,800 in taxable income. Since Jeremy's deductible expenses of $40,000 are less than the standard deduction for a single filer ($6,200 in 2014), he may deduct the full $40,000 in expenses. Therefore, his taxable income is reduced to $60,800 ($100,800 - $40,000). Using the 2014 tax brackets for a single filer, his tax liability is $13,359.50.

Jeremy,an American Citizen,earned $200,000 During 2014 While Employed in Switzerland