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My reputation is not strong enough to comment on some of the existing topics - please accept my apologies for a potentially mergable question(s).

Assumption: The Foreign Income Exclusion (Form 2555) requires exclusion of time spent while working on US soil - even if the company is not American/ I am paid out of country X entirely (i.e. really no US income).

Question: The Foreign Tax Credit specifically calculating the values for Line 1a. on General Income (Foreign Gross Income) requires the removal of the FIE (if present). This makes sense. The question is - am I removing that from my total income from country X inclusive of business trips or from the non-business trip amount?

If the latter, since I don't get a tax-waiver from Country X (by default) for time spent on US soil for tax purposes, isn't this effectively double taxation?

Or am I missing something?

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    "Or am I missing something?" When it comes to tax, the answer (even for an expert-level professional) is always "Yes, I might be missing something."
    – Grade 'Eh' Bacon
    Jun 20, 2016 at 17:35

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If you're a US citizen, money earned while in the US is sourced to the US. So you can't apply FTC/FEIE to the amounts attributable to the periods of your work while in the US even if it is a short business trip.

Tax treaties may affect this. Most tax treaties have explicit provisions to exclude short trips from the sourcing rules, however due to the "saving clause" these would probably not apply to you if you're a US citizen - you'll need to read the relevant treaty.

Your home country should allow credit for the US taxes paid on the US-sourced income, and the double-taxation avoidance provision should apply in this case.

The technicalities depend on your specific country. You would probably not just remove it from the taxable income, there probably is a form similar to the US form 1116 to calculate the available credit.

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  • Thank you. To further help flesh this out for posterity (and myself) - I don't see any guidance on the pro-rata formula - is it 365 calendar days or working days of the year for salaried employees?
    – NJL
    Jun 20, 2016 at 15:05
  • More Rabbits and Rabbit Holes for Posterity, what if the taxes have already been paid to country X where amended returns may not be possible? (i.e. I'm backfiling)? Any way out of chasing Country X for their relevant paperwork which they may not honor?
    – NJL
    Jun 20, 2016 at 15:26
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    @NJL what if what if what if... Good luck with that.
    – littleadv
    Jun 20, 2016 at 15:41
  • @NJL If you want all the 'what ifs' answered with certainty, you need to hire a professional. Specifically, one who practices in the international tax area. Talk is cheap, but an advanced position where someone will take the liability for bad advice, is expensive.
    – Grade 'Eh' Bacon
    Jun 20, 2016 at 17:34
  • OK - I certainly wouldn't want to put anyone on this website at risk for offering links / guidance. My hope was less interpretation on this matter with more transparent rules / case work for reference.... If a professional is required every year to sort through the vaguery... that's not a healthy state of affairs....
    – NJL
    Jun 21, 2016 at 1:13

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