Navigating Tax Residency Requirements of Foreign Earned Income Exclusion

Connie SHUM, Mary Jo GOEDEKE, Man Ching Gladie LUI

Research output: Journal PublicationsPolicy or Profession paper

Abstract

There are two general systems for the imposition of international taxation. In the worldwide system a country taxes its own residents based upon the residents' worldwide income. Countries utilizing the territorial system tax income sourced within the country's own borders. The US tax law creates a hybrid approach by utilizing the worldwide system as the structure for taxing its own citizens and resident aliens and utilizing the territorial system for taxing non-resident aliens. The US' definition for individuals who fall into the former category, and, therefore, subject to US taxation on their worldwide income, is broad. This category includes US Citizens, US green card holders, and individuals who meet the Substantial Presence Test. The income of these individuals will be subject to taxation under US tax laws, regardless of worldwide source. Understanding the rules and conforming the individual taxpayer's circumstances to fit the requirements of the Internal Revenue Code will allow taxpayers to make the greatest use of legislative relief.
Original languageEnglish
Pages (from-to)27-33
JournalTaxes
Volume96
Issue number6
Publication statusPublished - Jun 2018

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earned income
taxes
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income
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US citizen
tax system
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Cite this

SHUM, C., GOEDEKE, M. J., & LUI, M. C. G. (2018). Navigating Tax Residency Requirements of Foreign Earned Income Exclusion. Taxes, 96(6), 27-33.
SHUM, Connie ; GOEDEKE, Mary Jo ; LUI, Man Ching Gladie. / Navigating Tax Residency Requirements of Foreign Earned Income Exclusion. In: Taxes. 2018 ; Vol. 96, No. 6. pp. 27-33.
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SHUM, C, GOEDEKE, MJ & LUI, MCG 2018, 'Navigating Tax Residency Requirements of Foreign Earned Income Exclusion', Taxes, vol. 96, no. 6, pp. 27-33.

Navigating Tax Residency Requirements of Foreign Earned Income Exclusion. / SHUM, Connie; GOEDEKE, Mary Jo; LUI, Man Ching Gladie.

In: Taxes, Vol. 96, No. 6, 06.2018, p. 27-33.

Research output: Journal PublicationsPolicy or Profession paper

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AU - LUI, Man Ching Gladie

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N2 - There are two general systems for the imposition of international taxation. In the worldwide system a country taxes its own residents based upon the residents' worldwide income. Countries utilizing the territorial system tax income sourced within the country's own borders. The US tax law creates a hybrid approach by utilizing the worldwide system as the structure for taxing its own citizens and resident aliens and utilizing the territorial system for taxing non-resident aliens. The US' definition for individuals who fall into the former category, and, therefore, subject to US taxation on their worldwide income, is broad. This category includes US Citizens, US green card holders, and individuals who meet the Substantial Presence Test. The income of these individuals will be subject to taxation under US tax laws, regardless of worldwide source. Understanding the rules and conforming the individual taxpayer's circumstances to fit the requirements of the Internal Revenue Code will allow taxpayers to make the greatest use of legislative relief.

AB - There are two general systems for the imposition of international taxation. In the worldwide system a country taxes its own residents based upon the residents' worldwide income. Countries utilizing the territorial system tax income sourced within the country's own borders. The US tax law creates a hybrid approach by utilizing the worldwide system as the structure for taxing its own citizens and resident aliens and utilizing the territorial system for taxing non-resident aliens. The US' definition for individuals who fall into the former category, and, therefore, subject to US taxation on their worldwide income, is broad. This category includes US Citizens, US green card holders, and individuals who meet the Substantial Presence Test. The income of these individuals will be subject to taxation under US tax laws, regardless of worldwide source. Understanding the rules and conforming the individual taxpayer's circumstances to fit the requirements of the Internal Revenue Code will allow taxpayers to make the greatest use of legislative relief.

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SHUM C, GOEDEKE MJ, LUI MCG. Navigating Tax Residency Requirements of Foreign Earned Income Exclusion. Taxes. 2018 Jun;96(6):27-33.