I have a rather specific question about the Foreign Earned Income and Housing exclusion. I've used this exclusion before, having lived overseas for several years, and have never had to pay anything since my wife and I always made far less than the maximum exclusion amounts.
This year several family members back home in Oregon have passed away, and as a result I have inherited an annuity. I've been reading over the tax implications for withdrawing all the money from the annuity at once. I'm wondering if part of this annuity can be excluded from taxation under the foreign earned income exclusion since I am living overseas for the entire year. After our overseas earnings, about half the annuity will be covered under the foreign earned income exclusion (currently the max is $91,400 for 2009, I believe). Or will it? According to IRS publication 54 for U.S. citizens abroad, annuities are counted as unearned income. Will part the annuity qualify to fit under the exclusion, or will the entire amount be taxed because it was not foreign earned income, even though I am living overseas for all of 2010?
Thank you for your help and advice.
This year several family members back home in Oregon have passed away, and as a result I have inherited an annuity. I've been reading over the tax implications for withdrawing all the money from the annuity at once. I'm wondering if part of this annuity can be excluded from taxation under the foreign earned income exclusion since I am living overseas for the entire year. After our overseas earnings, about half the annuity will be covered under the foreign earned income exclusion (currently the max is $91,400 for 2009, I believe). Or will it? According to IRS publication 54 for U.S. citizens abroad, annuities are counted as unearned income. Will part the annuity qualify to fit under the exclusion, or will the entire amount be taxed because it was not foreign earned income, even though I am living overseas for all of 2010?
Thank you for your help and advice.
