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Basically, the irs recognizes that income earned abroad is taxed via resident country, and can be excluded from taxable income by the IRS generally if the proper forms are filled out. The source of the income salary paid for earned income has no bearing on whether is usually U.S. or foreign earned income, but where perform or services are performed (as inside the example of an employee doing work for the Oughout.S. subsidiary abroad, and receiving his pay check from the parent U.S. company out in the U.S.).
For my wife, she was paid $54,187, which she isn't taxed on for Social Security or Healthcare. transfer pricing She's got to put 14.82% towards her pension by law, making her federal taxable earnings $46,157.
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