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    ratree's Avatar
    ratree Posts: 2, Reputation: 1
    New Member
    		  
    #1

    Jun 9, 2009, 03:39 PM
    Foreign earned income
    This is a question for US 2008 return. I worked in the US for the first half of 2007 and then went to work in the UK for the rest of 2007. My 2007 bonus was paid in 2008. I also worked in the UK for the entire 2008. Would it be possible to consider my whole 2007 bonus as foreign earned income? Or do I have to split half as US earned and the other half as foreign earned?

    I'm trying to claim foreign tax credit on my return and it makes a big difference if I can consider the whole bonus as foreign earned. I'm not planning to do foreign earned income exclusion since it doesn't give as much benefit as the claiming foreign tax credit.
    MukatA's Avatar
    MukatA Posts: 7,110, Reputation: 176
    Tax Expert
    		  
    #2

    Jun 10, 2009, 01:20 AM

    If bonus was paid in 2008, then it is the income to be reported on 2008 tax return. If you were working in UK when you got the bonus, then it is UK income.
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
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    #3

    Jun 10, 2009, 07:29 AM
    Agreed; your locus when you receive the bonus determines whether it is foreign income or not.
    IntlTax's Avatar
    IntlTax Posts: 831, Reputation: 23
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    #4

    Jun 10, 2009, 01:32 PM

    It doesn't matter where you are when you receive the income. It matters where you are when you perform the services. If the 2007 bonus was partly for services rendered in the U.S. and partly for services rendered in the U.K. you need to split the bonus between the two countries. It may make the most sense to apportion the bonus using your base salary earned in the U.S. in 2007 and your base salary earned in the U.K. in 2007.
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