# capital gains and FEITW



## kofudave (Jun 1, 2018)

I'm new on this form, but hoping someone has some info regarding Capital Gains Tax and the Foreign Earned Income Tax Worksheet. 

I earned $92,615 and excluded all of it from the max allowed of 102,100 for 2017.

I also sold a property and have Capital Gains of $52,039.

My question is, on the FEITW, Line 2b, can I enter $9485 here? (the remainder of the maximum of the $102,100 - my income of 92,615)

Any help here would be totally appreciated!

Dave


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## Bevdeforges (Nov 16, 2007)

No.

The Foreign Earned Income Exclusion applies only to "earned income" (i.e. salary and salary-like income). Capital gains are considered "unearned income" and for tax relief, you can only use the Foreign Tax Credit (for taxes you paid on the capital gain in your country of residence).
Cheers,
Bev


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## kofudave (Jun 1, 2018)

Thanks for the quick and useful response Bev.

I have now completed the FEIE Worksheet and according to the instructions I must add my excluded income to the Capital Gains(appox. 92K income plus 52K CG = 144K, requiring me to calculate using the 28% tax rate for total income, which then is used in the FEIEWorksheet to calculate CG tax)...and the final tax owed shows about 23%, yet everything I have read shows that 15% is the norm of CG. I can't find an explanation for this...am wondering if this higher rate is because I live overseas and use the FEIE?


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## Bevdeforges (Nov 16, 2007)

I'd take a look through this document https://www.irs.gov/taxtopics/tc409 but I always thought that the capital gains are handled separately from regular income and thus subject to the 15% rate (or the 20% rate if you have gobs of other income).
Cheers,
Bev


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## kofudave (Jun 1, 2018)

Bev...thanks heaps for the link! It was complicated, but the was finally able to get the right worksheet filled out...in my case, since I used the FEIE I needed to follow all CG worksheets associated with the FEIE. After filling them all out my total tax was around 10%, not 23%. Thanks again for your link and quick replies! 

Dave


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