IRS "stacking provisions"

[SM]

Does anyone know when the IRS stacking provisions “kick-inâ€￾, before or after you reach the maximum FEIE limit? For 2014, the FEIE limit was $99,200. If you only made $70K of Canadian employment income and had $10K of other US source income, would the stacking provisions still apply to the $10K, or would they only apply if you made more than $99,200 of employment income?

Furthermore, how do the standard deduction and personal exemption come into play in this example? Let’s say I’m single with a standard deduction of $6,200 and a personal exemption of $3,950 ($10,150 total). Because the $10K is less than $10,150, would you owe any tax in this scenario?

[nelsona]

They apply if EITHER you earned more than the annual FEIE limit in earned income, OR if your other income exceeded your itemized/standard deduction plus your exeptions (in other words if you have positive value on line 43.

Only itemized deductions that would be directly related to your foreign earned income would not be used.

The best thing to do woiuld be to plug your number sand circumstances into free tax software.

[nelsona]

if either of these occur, your tax on line 44 of 1040 is determined by the FEIE works heet in the 1040 guide.

[SM]

Ok thanks so much, this has always confused me. So looks like in my example, the stacking provisions would not apply and no tax would be owing correct? I think the FEIE comes off on line 21 as a minus and that would leave me with $10K; which would be eliminated with the standard deduction and personal exemption before line 43.

Yeah this looks too complicated to do by hand, I think I can use TaxAct Online for free. Is there anything better out there or is this one sufficient?

[nelsona]

sounds about right

[SM]

Thank you!