Do I need to pay taxes on foreign income. Heading back to US next March.

[Dante2019 9]

I will be heading back to the US from Korea next March. I will have income in Korea(Korean school) from January to February  of about 6-10k. I was wondering for my 2022 tax return, do I need to pay taxes on the two months I will work abroad?

[Redro 4,611]

11 minutes ago, Dante2019 said:

I will be heading back to the US from Korea next March. I will have income in Korea(Korean school) from January to February  of about 6-10k. I was wondering for my 2022 tax return, do I need to pay taxes on the two months I will work abroad?

What about 2021? Have you been working in Korea or the US?

[Dante2019 9]

1 hour ago, Kor2USA said:

What about 2021? Have you been working in Korea or the US?

In Korea. But 2021 is not an issue because I'll be exempted from paying any taxes.

[Redro 4,611]

9 minutes ago, Dante2019 said:

In Korea. But 2021 is not an issue because I'll be exempted from paying any taxes.

You file another 2555 for the first 2 months of 2022. 

You'll qualify using the Physical Presence Test and  can write in that you resided in Korea from March 2021- February 2022 (Or whatever 12 month period up until you leave Korea). 

From Instructions for 2021: 

Part III Physical Presence Test To meet this test, you must be a U.S. citizen or resident alien who is physically present in a foreign country, or countries, for at least 330 full days during any period of 12 months in a row.

https://www.irs.gov/pub/irs-pdf/i2555.pdf

 

 

 

Edited December 7, 2021 by Kor2USA

[Dante2019 9]

23 minutes ago, Kor2USA said:

You'll qualify using the Physical Presence Test and  can write in that you resided in Korea from March 2021- February 2022 (Or whatever 12 month period up until you leave Korea). 

This is something I didn't know about. I thought the Physical Presence Test only starts from January to December of that specific year. I used the Bona Fide Residence in my previous 2555.

 

Thank you for the information. 

[Wuozopo 4,293]

On 12/7/2021 at 12:12 AM, Dante2019 said:

. I used the Bona Fide Residence in my previous 2555.

You can use bonafide resident again for the months in 2022. 

[Dante2019 9]

On 12/8/2021 at 11:36 PM, Wuozopo said:

You can use bonafide resident again for the months in 2022. 

I'm guessing I can use the bona fide residence from the day I started living in Korea (09/2016) to March 2022? I believe the good news for me is that I don't have to pay taxes to the IRS from January 2022 to March 2022.

I'm also guessing that I only have to pay taxes to the IRS from March 2022 to December 2022? Those are the dates when I will work in the US.

[Wuozopo 4,293]

6 hours ago, Dante2019 said:

I'm guessing I can use the bona fide residence from the day I started living in Korea (09/2016) to March 2022? I believe the good news for me is that I don't have to pay taxes to the IRS from January 2022 to March 2022.

I'm also guessing that I only have to pay taxes to the IRS from March 2022 to December 2022? Those are the dates when I will work in the US.

You will report all of your 2022 income on your tax return. Then your form 2555 figures your foreign earned income exclusion for the income earned while you were a bonafide resident of Korea (Jan-Mar). There is a special tax worksheet that is used to figure the tax that your excluded salary would generate. Then it is subtracted from your tax amount. Tax programs do all the figuring in the background so you don’t have to even know about the worksheet.  A simplified explanation of it is

$$$ tax on all your 2022 Jan-Dec income = A

$$$ tax on just the Jan-Mar income = B

A minus B = $$$  your tax

 

A tip to remember : When you convert your Karan earnings to USD for the tax return, use the exchange rate in effect Jan-March 2022, not the exchange rate in effect at the time you are doing your taxes in 2023.

 

-

Edited December 10, 2021 by Wuozopo

[iwannaplay54 985]

8 hours ago, Dante2019 said:

I'm guessing I can use the bona fide residence from the day I started living in Korea (09/2016) to March 2022? I believe the good news for me is that I don't have to pay taxes to the IRS from January 2022 to March 2022.

I'm also guessing that I only have to pay taxes to the IRS from March 2022 to December 2022? Those are the dates when I will work in the US.

It’s prorated for the first and last year you exclude foreign earned income

Edited December 10, 2021 by iwannaplay54

[Dante2019 9]

On 12/10/2021 at 11:12 PM, Wuozopo said:

You will report all of your 2022 income on your tax return. Then your form 2555 figures your foreign earned income exclusion for the income earned while you were a bonafide resident of Korea (Jan-Mar). There is a special tax worksheet that is used to figure the tax that your excluded salary would generate. Then it is subtracted from your tax amount. Tax programs do all the figuring in the background so you don’t have to even know about the worksheet.  A simplified explanation of it is

$$$ tax on all your 2022 Jan-Dec income = A

$$$ tax on just the Jan-Mar income = B

A minus B = $$$  your tax

 

A tip to remember : When you convert your Karan earnings to USD for the tax return, use the exchange rate in effect Jan-March 2022, not the exchange rate in effect at the time you are doing your taxes in 2023.

 

Thank you.