# LLC/S Corp and Foreign Earned Income Exclusion



## hasanbeigi (Jan 23, 2019)

For US Expats:
I found out that Foreign Earned Income Exclusion only applies to salary and wages that expats have on their W-2. I have a LLC that's taxed as S Corp. So, to avoid 15% self employment, it's best I pay as low as possible salary to myself. But if I want to take advantage of FEIE to avoid 22% federal tax on my salary income, I better pay more salary to myself. 
That's a trade off. Looks like the difference is only around 7% (difference between 22% fed tax and 15% self employ tax). 
Of course, it may vary based on your fed tax bracket and income level. I am interested to hear people's opinion to see if my evaluation is roughly correct.
Thanks!


----------



## Bevdeforges (Nov 16, 2007)

I'm assuming that Indonesia doesn't have a social security treaty with the US. 

The easiest route for you to take might be to pay yourself as an employee of the Corporation and then use the FEIE to exclude the salary income. There is a reasonable chance that they won't bother hitting you up for the self-employment tax. But that's definitely an "issue" if your LLC/S Corp is based in the US and you can't show that you are somehow registered in whatever sort of "social security" or other social insurance program that might exist in Indonesia.


----------



## hasanbeigi (Jan 23, 2019)

Bevdeforges said:


> I'm assuming that Indonesia doesn't have a social security treaty with the US.
> 
> The easiest route for you to take might be to pay yourself as an employee of the Corporation and then use the FEIE to exclude the salary income. There is a reasonable chance that they won't bother hitting you up for the self-employment tax. But that's definitely an "issue" if your LLC/S Corp is based in the US and you can't show that you are somehow registered in whatever sort of "social security" or other social insurance program that might exist in Indonesia.


Thanks for your response. I am not actually long term resident in Indonesia. I do not have a base in other countries and traveling from one to another. Nomad kind. 
Also, I do plan to pay Self Employment tax, as there is no way around it unless getting into shady area. 
My LLC is based in US.
Having all these said, and that I Will have to pay self employ tax on salary I pay myself, it looks like FEIE won't benefit me much. It might lower the tax on the salary portion of my income for about 7-8%. makes sense?


----------

