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I am a US citizen living abroad. I pass both the bona-fide residency test and the presence test. I pay income taxes in the country where I reside.

I am the sole member of a Delaware LLC, whose income passes through to me. The LLC derives its income from a service it sells mostly to US companies. I am the sole person working for the LLC and perform all of the work related to its operation while I live in another country.

Let's say the LLC ends a particular year with $50,000 in income. Would this be considered "foreign earned income" by the IRS, and would the FEI exclusion apply to it?

  • If it is a single member LLC - what does 1065 (partnership return) mean in this context? – littleadv Jan 6 '15 at 16:15
  • Sorry for the confusion. I mean it to indicate that I did not choose for it to be treated as a corporation for tax purposes. I am removing that reference as it is confusing. – Krystian Cybulski Jan 6 '15 at 20:26
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    Then it is disregarded for tax purposes, isn't it? IRS don't care about it at all - it becomes your regular schedule C income. – littleadv Jan 7 '15 at 3:15
  • Sure. I know it becomes regular schedule C income. The question is, is this schedule C income considered "foreign earned income" so that I can apply it towards the Foreign Earned Income Exclusion. – Krystian Cybulski Jan 8 '15 at 14:49

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