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Antioch California online Form Instructions 1045: What You Should Know

If you file the form without Form 2555-EZ, you may be able to exclude as much as 600,000. It's true. The Income Tax Rate Schedule allows you to exclude a lot of income! But what does that mean from a practical perspective? Your U.S. taxes and your foreign taxes can sometimes get mixed up! A lot of people think that when they file their foreign tax return, all of their earned income will be exempt from income taxes and taxed at the same flat rate. If you're thinking about doing this, you're actually wrong. Your income taxes will depend completely on how much of this foreign income you exclude for you U.S. taxes. If you include 1 million in a foreign income tax exclusion, your tax rate isn't 14.5%. It's 30%. Your marginal tax rate is much higher. You have to understand how this works to fully understand the foreign tax credit. Why would you want to exclude foreign earned income in your form 2555 return? You'll need to know your exact income for this type of non-refundable tax credit, so you'll need to file Form 2555, the foreign earned income exclusion, for each of the years in which you want the credit. If your non-refundable foreign earned income tax credit is used up each year, you'll pay no tax for the year. It won't have a negative effect on the amount of money you earn in the U.S. over and above the amount of taxes you pay to the U.S. A non-refundable foreign earned income tax credit is a positive thing for you. You will not have to pay any taxes on the amount you excluded from your U.S. tax return! This is a benefit that will make your non-refundable foreign earned income tax credit extremely valuable. It's only if your income is below half of the IRS-set maximum limits that your tax benefit is reduced significantly. That's a limit on your annual non-business tax exclusion of 128,800. If your foreign earned income deduction is above the limit, it will not be reduced. Your tax savings will stay exactly the same whether you use the deduction above or below the limit. Your U.S. tax return might be affected if you file a Form 1040-ES or 1040-NR.

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