Morton S. Winer, CPA

 

9933 North Lawler Avenue, Suite 410

Skokie, IL 60077

 

Phone: 847-676-8900

 

Website: www.msw-cpa.com

February 2022

February 2022 Client Profile

handsome smiling realtor with keys of sold house

Jerry recently sold his home in Michigan and bought a condo in Panama. He plans to live in Panama and make trips back to the U.S. to visit friends and family. Will he still need to file U.S. tax returns?


Because the U.S. taxes citizens on their worldwide income, Jerry will need to file a tax return regardless of where he lives. But he may be able to exclude some income if he’s gone long enough.


Jerry may qualify for the foreign earned income exclusion (FEIE) if he is out of the country for at least 330 days during a 12-month period. This physical presence test doesn’t require the 330 days to be consecutive, but he will need to keep track of the days he is in the U.S. — even if they are partial days.


The FEIE allows Jerry to exclude wages, commissions and professional fees earned while in Panama—even if working for an American company. But this doesn’t include unearned income, such as dividends, interest, or capital gains.


Client Profile is based on a hypothetical situation. The solutions discussed may or may not be appropriate for you.


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