My client lives in Mexico and works out of the country. He has been claiming Head of Household with one of his twin sons as dependent (actually both of them are but his ex gets the other one if she wants him). We have taken the foreign income exclusion since he owns his home in Mexico. New wrinkle: He is now retired and his wife lives in the U.S. (California). Both sons have been cut off from the gravy train at the ripe old age of 28. He would be filing MFS if he continued with a separate return. We are considering subjecting his income to California tax by filing jointly this year. Would it still be possible to take foreign income exclusion for the wages? He still lives in Mexico; in fact, they are building a new home there closer to the ocean. He had no income after his retirement. He made about $120,000 last year in wages subject to exclusion and she made about $35,000. Linda Dorfmont E.A., CFP, CSA
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