USA S Corp Foreign Earned Income Exclusion

Joined
Nov 24, 2017
Messages
1
Reaction score
0
Country
United States
Hi,

I am the Sole Owner of an S-Corporation. I am living overseas and qualify for the Foreign Earned Income Exclusion via the physical presence test.

I will receive the profits from the S Corp in two ways. A salary and a distribution. Let’s say that my salary will be $40,000 and my distributions will be $20,000. Also, I actively work to generate all the income, it is not passive (rental properties, etc.)

My salary will be foreign earned income and not subject to Income Tax, but it will be subject to Self Employment Tax.

Are my distributions considered Foreign Earned Income? Will I be able to take the $20,000 distribution and non pay any Income Tax or Self Employment Tax on it?

Thanks for your help!
 

Drmdcpa

VIP Member
Joined
Aug 2, 2017
Messages
499
Reaction score
42
Country
United States
If you meet the exclusion it will only be for salaries. S corp distributions are not earned income.

I am assuming you are a US citizen. Otherwise you could not have an S Corp.
 

Ask a Question

Want to reply to this thread or ask your own question?

You'll need to choose a username for the site, which only take a couple of moments. After that, you can post your question and our members will help you out.

Ask a Question

Top