Originally Posted by
iflysky
This comes directly from IRS Pub. 54 (pg.34 QnA)
" 5) My U.S. employer pays my salary into my U.S. bank account. Is this income considered earned in the United States or is it considered foreign earned income?
If you performed the services to earn this salary outside the United States, your salary is considered earned abroad. It does not matter that you are paid by a U.S. employer or that your salary is deposited in a U.S. bank account in the United States. The source of salary, wages, commissions, and other personal service income is the place where you perform the services. "
However, despite the above provision, I still strongly recomend consulting a professional CPA or an attorney specializing in foreign taxes. Everyone's situation is different and can be interpreted differently by the IRS.
The wording here is very interesting. It clearly states in this publication that if the money is earned outside the United States then it qualifies as foreign earned income. But the practice has been that only money earned in a foreign country counts. The difference being that in this publication you could make the case that money earned in international airspace should count for the foreign earned income exclusion because it is earned outside the United States. Of course this is the IRS/US government we are talking about here, so conflicting information should be no surprise..