Originally Posted by
NEDude
The second issue at hand is that the Supreme Court refused to hear the case of an United flight attendant, who is an American citizen and based in Hong Kong, who attempted to claim the foreign income exclusion for all of her income. The U.S. tax court ruled in 2013 that all income earned while in international airspace did not qualify as foreign earned income and thus was not eligible for the exclusion. The IRS assessed a 20% negligence penalty on her taxes as well. Since the Supreme Court refused to hear the case, the 2013 ruling of the tax court stands and is now essentially the accepted and undisputed law of the land. The article did not mention how much she owed or what the 20% penalty was, but you can see that with the new passport revocation law, her career could quickly be jeopardy. Even most regional U.S. airlines require a passport for flight crews
There is no news here. You can live overseas, but if you are employed in the USA there is no foreign earned income exemption because it is not foreign earned income! I lived and worked overseas and had the foreign earned income exemption. Then I took a job for a USA company for 6 months while still maintaining my residence overseas, and did not establish any residence in the USA. I was not able to take the foreign earned income exemption for that calendar year. Any $30 tax software program will keep you from making that mistake. The foreign earned income exemption is still in place for people who are bonafide residents of a foreign country and are employed in that country for an entire tax year. There is no mystery here. Just follow the rules. Turbotax basic or H&R Block basic software or will keep you out of trouble.