Employees Working Abroad and Aliens in the U.S. Calculations Employees Working Abroad and Aliens in the U.S.

Problem # 1 An U.S. citizen, who is a bona-fide resident of Germany, has an annual salary of $90,000 and has a COLA of $6,500. The employee works 5 days in a normal workweek. The employee worked 35 days in the U.S. during the year and worked a total of 250 days after subtracting vacation taken. Calculate the foreign source income for the employee. Answer: $82,990 35 days / 250 days = .14 $90,000 + $6,500 = $96,500 (total income) $96,500 x .14 = $13,510 (U.S. source income) $96,500 - $13,5100 = $82,990

Problem # 2 An employee qualifies for the foreign housing cost exclusion under the physical presence test. The employee’s annual salary is $150,000 and has reasonable housing expenses of $28,400. Calculate the foreign housing cost exclusion for the employee. Answer: $11,776 $103,900 (foreign earned income exclusion) x .16 = $16,624 (base housing) $28,400 - $16,624 = $11,776

Problem # 3 An U.S. citizen, who is a bona-fide resident of Wales, has an annual salary of $95,000 and has a COLA of $9,000 and a housing allowance of $10,000. The employee works 4 days in a normal workweek. The employee worked 31 days in the U.S. during the year and worked a total of 49 weeks after subtracting vacation taken. Calculate the U.S. source income for the employee. Answer: $18,240 49 weeks x 4 days per week = 196 days 31 days / 196 days = .158 $95,000 + $9,000 + $10,000 = $114,000 (total income) $114,000 x .16 = $18,240 (U.S. source income)

Problem # 4 An employee qualifies for the foreign housing cost exclusion under the physical presence test. The employee’s annual salary is $90,000 and has reasonable housing expenses of $25,000 and COLA of $5,000. Calculate the foreign housing cost exclusion for the employee. Answer: $9,800 $90,000 + $5,000 = $95,000 $95,000 (under foreign earned income exclusion) x .16 = $15,200 $25,000 - $15,200 = $9,800

Problem # 5 An alien employee is present in the U.S. for 90 days during the current year, 270 days during the first preceding year, and 240 days during the second preceding year. How many days is the employee present in the U.S. under the substantial presence test? Answer: 220 days 90 + (270 / 3) + (240 / 6) 90 + 90 + 40 = 220