If you are a U.S. citizen or resident with income from sources
outside the United States, you must report all that income on your tax
return unless it is exempt by U.S. law. This applies to earned income
(such as wages) as well as unearned income (such as interest,
dividends, and capital gains).
Foreign earned income exclusion and foreign housing exclusion
and deduction.
Certain taxpayers can exclude or deduct income earned in foreign
countries. However, the foreign earned income and housing exclusions
and the foreign housing deduction do not apply to the income you
receive as an employee of the U.S. Government.
U.S. agency reimbursed by foreign country.
If you are a U.S. Government employee paid by a U.S. agency to
perform services in a foreign country, your pay is from the U.S.
Government and does not qualify for the exclusions or the deduction.
This is true even if the U.S. agency is reimbursed by the foreign
government.
Employees of post exchanges, etc.
If you are an employee of an Armed Forces post exchange, officers'
and enlisted personnel club, embassy commissary, or similar
instrumentality of the U.S. Government, the earnings you receive are
paid by the U.S. Government. This is true whether they are paid from
appropriated or nonappropriated funds. These earnings are not eligible
for the foreign earned income and housing exclusions or the foreign
housing deduction.
Other employment.
If you are a U.S. citizen or resident employed abroad by the U.S.
Government and you also receive income from a private employer or
self-employment, you may qualify to claim the exclusions or the
deduction applicable to this other income. To qualify, you must meet
either the bona fide residence test or the physical presence test.
Your spouse who is a U.S. citizen or resident alien may also qualify
if he or she earns income in a foreign country that is paid by a
private employer or is from self-employment. Amounts paid by the
United States or its agencies to you if you are not their employee may
also qualify for the exclusions or the deduction.
Additional information.
For more information on the foreign earned income and housing
exclusions and foreign housing deduction, see Publication 54.
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