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Foreign Earned Income Exclusion
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shackacctsvcs
Level 1
02-25-2023
08:06 AM
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I have a client who has foreign earned income, which a portion is being excluded. After the exclusion, their taxable income remaining is $30,553. ProConnect is calculating a tax liability of $7,332, but if I do the math based on the tax table, it should be $2,433. What is strange is that their marginal and effective tax rates are exactly the same (24%). Is their a rule that exists, where the remaining foreign income gets taxed at a flat 24% rate? I could not find this anywhere in the IRS tax code.
| Taxable Income | $30,553 |
| Up to $10,275 excluded | |
| Amount Taxable | $20,277 |
| Tax @ 12% | $2,433.24 |
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3 Comments 3
sjrcpa
Level 15
02-25-2023
10:20 AM
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The remaining income gets taxed at the bracket that would apply if there was no foreign earned income exclusion.
The software should provide a worksheet.
The more I know, the more I don't know.
shackacctsvcs
Level 1
02-25-2023
11:33 AM
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Perfect! Thanks for the explanation.
