2555 EZ FOREIGN EARNED INCOME EXCLUSION

[SHARON B]

HELP! Client earned 300,000 in US Jan thru Oct. Earned 23,788 US dollars in Hong Kong for balance of year. How do I report income from China? Using exclusion form he does not qualify for exclusion, but if that is the case is the China money taxable here? It is a Chinese company not US owned. No w2 given..

[TaxCPANY]

HELP! Client earned 300,000 in US Jan thru Oct. Earned 23,788 US dollars in Hong Kong for balance of year. How do I report income from China? Using exclusion form he does not qualify for exclusion, but if that is the case is the China money taxable here? It is a Chinese company not US owned. No w2 given..

First, determine if client will remain overseas long enough to qualify for IRC Sec. 911 exclusion. If so, file special extension form 2350 -- but pay best estimate of tax on the 300K upfront. Overall, your client has a few ways to explore, yet. Take heart.

"Long enough" is determined by either the Physical Presence Test or Bonafide Residence. If you're not acquainted with those, check 'em out.

Of course, I've assumed client is a U.S. tax resident. Non-resident alien might escape US tax on HK income if departure from U.S. for good.

Don't forget, if client indeed is on assignment overseas, JUNE 16 is the deadline for extending/filing, not April 15.

Good luck, TaxCPANY