Should I report foreign earned income on Line 1a or 1h on 1040 form?

Is this the same for contractors? I'm a US citizen working as an independent contractor in Thailand, not as an employee. Would my income still go on line 1a, or would it go somewhere else since it's not technically "wages"?

For independent contractors, you would report your income on Schedule C (Profit or Loss from Business), and the net profit would flow to Schedule 1, line 3, not line 1a. Line 1a is specifically for employee wages reported on forms like W-2. If you're self-employed abroad, you'll still use Form 2555 to exclude your foreign earned income, but the income sourcing on your tax return is different because you're not an employee receiving wages. You'll need to file Schedule SE as well to calculate self-employment tax, though the Foreign Earned Income Exclusion doesn't exempt you from self-employment taxes, only income tax.

How does it handle foreign housing exclusion? I'm in Dubai and my company provides housing, so I'm wondering if this would help me figure out if I can claim that additional exclusion on top of the FEIE?

Are you sure it works for all countries? I'm in Brazil and their tax system is completely different. Hard to believe an AI tool could understand Brazilian tax documents...

For the foreign housing exclusion, yes, it absolutely handles that! It walked me through determining my housing expenses and calculating the appropriate exclusion amount based on the location-specific limits. It asked about my housing situation and helped me understand which expenses qualified. Regarding different countries, it worked perfectly with my German documents, but I can't speak specifically to Brazilian tax documents. However, the tool is designed to understand the US tax implications of foreign income regardless of source country. The core rules for the Foreign Earned Income Exclusion and Foreign Housing Exclusion apply similarly across countries, though the specific documentation might vary.

How does this actually work? I thought the IRS phone lines were just permanently busy and there's no way to get through. Are they somehow jumping the queue?

This sounds like a scam. There's no way to "skip the line" with the IRS. They'd never allow a third party to give people preferential access to their phone lines. I'm calling BS.

It works by using automated technology to handle the waiting for you. Instead of you personally sitting on hold for hours, their system does the waiting and then calls you once an actual IRS agent is on the line. It's not "skipping" the queue - you're still in the same queue as everyone else, but you don't have to be the one physically waiting on the phone. This isn't a scam or preferential access. Think of it like those restaurant services that wait in line for you and then text when your table is ready. The IRS has no problem with this because from their perspective, it's just a normal call coming through their system in the regular order. The difference is that you aren't wasting hours of your day listening to hold music.

What about foreign rental income? I have a small apartment I rent out in Malaysia where I live. Does that go on a different line?

Foreign rental income should be reported on Schedule E, not on line 1a or 1h of Form 1040. You report rental properties the same way whether they're in the US or abroad. Schedule E is for reporting income or loss from rental real estate, and after completing it, the total amount gets transferred to Schedule 1, line 5, which eventually flows to your 1040. You'll still need to convert the amounts to US dollars using the appropriate exchange rates. Also note that rental income typically can't be excluded using the Foreign Earned Income Exclusion since it's not "earned" income - it's considered passive income.

You're definitely not alone. The US and Eritrea are the only countries that tax based on citizenship rather than residency. It's especially frustrating when you're already paying taxes in your country of residence and then have to deal with US tax compliance too.

Thanks for the detailed explanation! I'm actually in a similar situation but working remotely for a US company while living in Japan. Do you know if there are any differences in how I should report my income since my employer is US-based but I'm physically working from Japan? I'm getting a regular W-2 from my US employer, but I'm wondering if the physical presence test still applies when working for an American company.

@Paolo Longo That s'a great question! Since you re'receiving a W-2 from your US employer, your income would still go on Line 1a of Form 1040 just like any other W-2 wages. The key factor for the Foreign Earned Income Exclusion isn t'who pays you, but where you physically perform the work. If you re'physically working from Japan and meet either the bona fide residence test or the physical presence test 330 (days in a foreign country during a 12-month period ,)you should be able to claim the exclusion on Form 2555. The fact that your employer is US-based doesn t'disqualify you - what matters is that you re'physically present in Japan while earning the income. Just make sure to keep good records of your time in Japan, especially any trips back to the US, since those days won t'count toward your 330-day requirement. Also be aware that if your employer is withholding US taxes from your paychecks, you may get a nice refund once you apply the Foreign Earned Income Exclusion!

This is incredibly helpful, especially the point about using Treasury Department exchange rates! I had no idea there was a specific requirement for which rates to use. I've been using whatever rate my bank showed me when I converted money, which could definitely be causing issues. Quick question about the spreadsheet tracking - do you just track the actual dates you're in/out of Singapore, or do you also note the reasons for travel? I'm planning a few trips back to the US this year to visit family and want to make sure I'm documenting everything properly for the physical presence test. Also, when you mention the Singapore vs US tax year difference, are you referring to making sure the income reported aligns with the US calendar year (Jan-Dec) even though that might span across different Singapore tax periods? Want to make sure I understand this correctly before I file.

@LunarLegend For the spreadsheet tracking, I just keep it simple - date in, date out, and destination/origin. You don't need to document reasons for travel for IRS purposes, but I do include a brief note (like "family visit" or "business trip") just for my own records. The IRS only cares about the actual days you were physically present in a foreign country. Regarding the tax year alignment - yes, exactly! You need to report income that corresponds to the US tax year (January 1 to December 31) on your US return, regardless of when Singapore's tax year runs or when you received certain payments. So for your 2024 US tax return, you'd report all income earned from January 1, 2024 to December 31, 2024, even if some of that spans different Singapore tax periods. One more tip: the Treasury exchange rates are published annually, usually around March/April for the previous year. Until then, you can use the Federal Reserve's daily rates, but switch to the Treasury annual average once it's available. Makes everything much cleaner and more defensible if questioned.

This is such a helpful thread! As someone who just moved to Singapore last month for work, I'm already dreading next year's tax season. It's reassuring to see that so many people have successfully navigated this process. One question I have - since I'll only be in Singapore for part of 2025 (started in December 2024), do I need to prorate anything for the Foreign Earned Income Exclusion, or does it work differently when you're not abroad for the full tax year? I'm assuming I'll still report all my income on Line 1a regardless, but wondering about the exclusion calculation for a partial year abroad. Also, @QuantumQuester, when you mention making sure tax software is set up properly for foreign income - are there specific settings or flags I should look for? I want to make sure I don't accidentally mess something up in the setup process.