Foreign earned income exclusion for K1 visa

[triplebeam1 0]

Hi all,

 

I'm filing taxes for myself and my wife this year, and it's complicated! We plan to file jointly. I am confused as to whether the income she earned before she moved here will qualify for the foreign earned income exclusion.

For background:

• My wife moved to the US from Hong Kong in March 2024. She lived in Hong Kong for many years.
• She got a green card in mid-2024 and has not left the US.
• Before she moved, she earned some money in Jan 2024 from her previous job. 

 

My understanding is that she would meet the physical presence test, and if we file jointly, she would qualify for the foreign earned income exclusion. I believe the exclusion amount would be prorated based on the amount of time she spent overseas in 2024. Is that correct?

Edited Wednesday at 10:59 PM by triplebeam1

[JKLSemicolon 434]

3 hours ago, triplebeam1 said:

Hi all,

 

I'm filing taxes for myself and my wife this year, and it's complicated! We plan to file jointly. I am confused as to whether the income she earned before she moved here will qualify for the foreign earned income exclusion.

For background:

• My wife moved to the US from Hong Kong in March 2024. She lived in Hong Kong for many years.
• She got a green card in mid-2024 and has not left the US.
• Before she moved, she earned some money in Jan 2024 from her previous job. 

 

My understanding is that she would meet the physical presence test, and if we file jointly, she would qualify for the foreign earned income exclusion. I believe the exclusion amount would be prorated based on the amount of time she spent overseas in 2024. Is that correct?

Assuming the period used to meet the physical presence test is something like March 1, 2023 to February 28, 2024, the total income possible to exclude would have to be prorated by the number of days in 2024 that she spent outside the US.

 

So going with the above, say she spent ~60 days (Jan/Feb) outside the US in 2024 before moving. The max FEIE is something like $120k, so in this case the prorated exclusion possible would be something like (60/365)*$120,000 = about $20,000. If she only worked in January that almost surely means she can exclude all of her foreign income.

 

Most tax software will walk you through the steps you need to get this right as long as you know what 12-month period you are using to meet the physical presence test. Not sure if you qualify for any of the IRS free filing options with third party software?

Edited yesterday at 02:44 AM by JKLSemicolon