# Declare Foreign Earned Income?



## viplu

Hi,
I have a tax question related to Foreign Income.
I am on L1 VISA and my spouse and son are on L2 VISA.
We all arrived in Texas, US on 30th June 2012 from India and have been living in Texas since then.
I am working here. My wife is a housewife and my 2 year old son lives with us.
Our expected date of return to India is 30th April 2013.

We qualify for the resident alien status as we have stayed for 183 days or more in 2012 in US. Both me and my wife have SSN and I will be applying for ITIN for my son along with this year's return. We will be filing "Married Jointly".

Now, during the period of Jan 2012 to June 2012, I worked in India and had income from salary there. I have filed the income tax return in India in June 2012 for financial year ending March 2012. The income tax is deducted at source in India. So, should I declare foreign income for these 6 months in the US return?


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## BBCWatcher

Yes, but you will also be eligible for a foreign tax credit.


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## viplu

Thanks for the response.
So should I take foreign income exclusion or foreign tax credit?


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## BBCWatcher

I don't think it's going to matter much since India's tax rates look like they're slightly higher than U.S. rates (particularly in tax year 2012). You may not qualify for the FEIE anyway. Check both if you can and if you qualify. Tax preparation software, even the free TaxACT.com, should let you try it both ways.


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## Bevdeforges

Presumably, you qualify for the FEIE since you were probably living in India for several years before you came to the US last year. But doing the FEIE for a partial year can get tricky, as you have to apportion your expenses and deductions between the portion of your income that you're excluding and the part that you aren't.

On that basis alone, it may simply be easier to take the foreign tax credit. Though if you use tax software, you can try both ways and see which one works best for you, as BBCWatcher suggests.
Cheers,
Bev


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