foreign income and tax

Unless she was out of the country for more than just the time she worked in Israel, she would not qualify for the foreign earned income exclusion -- five months is well short of the required 330 days. The money earned, if it was in the form of a salary or wages, goes on line 7, just as any other salary and wage income. There is, of course, no W-2 for this entry; the amount is just added to all other W-2 income. Any payments made in Israeli currency must be translated to dollars at the appropriate exchange rate. She would be eligible for the foreign tax credit so her return should contain Form 1116 to determine the amount. Without the full details of her return, it isn't possible to calculate the credit but is should be sufficient to eliminate any tax liability. Lanny K. Williams, CPA Nawarat, Williams & Co., Ltd. Income Tax Services for Expatriate Americans

Report the income in the same category as normally would on the 1040 if earned in the US. You may either take 1116 FTC or 2555 FIExclusion. If you are taking Foreign Tax (General Limitations) you will report on Part II of 1116. 2555, you would not report the foreign tax. If US Taxes withheld on the US Income, then she may not pay but otherwise, she does.

Wages in Israel go on line 7, Form 1040. Fill out Form 1116, credt goes on line 47. Bill

Wages in Israel go on line 7, Form 1040. Fill out Form 1116, credt goes on line 47. Bill

She does not qualify for foreign earned income credit, but she can claim foreign tax credit on Form 1116.