Missionaries Working Abroad - FEIE

[SaoneFinancial]

I have a new client and I am not familiar with any special exemption to taxation for a Missionary working abroad being paid as an employee. There are no federal taxes being withheld on their form W2. 

The previous CPA took the FEIE on their 2022 tax returns - although the client did not pay taxes in the foreign country of residence. My understanding is that in order to take the FEIE you must report and pay taxes to the foreign country where you reside. My client has spoken to many other missionaries who all claim the FEIE but may or may not be reporting their income in the foreign country where they claim it.

What am I missing?? Is there some exemption I'm not aware of? Or are missionaries evading taxes by taking the FEIE and not reporting it on the other side? 

Thank you in advance for providing knowledgeable feedback and not patronizing comments 🙂

[qbteachmt]

The IRS has great resources, including a listing of their wizards for International issues:

https://www.irs.gov/help/ita

"and not patronizing comments"

Well, I think you would see the peer users contributing their volunteer efforts are not patronizing. Maybe a little snarky and frustrated now and then.

This is not Intuit's customer support (but is mistaken for one), and it really is meant to be a "how to use" and not Tax Rules, community. A lot of postings this time of year are either TurboTax users who are lost on the internet, or purported preparers that haven't bothered to know the most basic details of what they are doing (and often are foreign and might even be AI nowadays).

Of course, we all learn from each other. Some people just don't pay attention.

I do speak for myself when I point out there is an expectation, when very basic questions are asked, or the question requires up to date information due to a bazillion tax code changes and retroactive ... that the person asking could have looked first, using a google search even. But everyone had a "first time" moment, that they didn't know something even existed, so we provide info and bookmarks and resource references.

Also, when someone keeps asking the most basic questions, and especially when their further input shows they want their own intended result, not the "right" result, that you see the snark come out.

[sjrcpa]

"What am I missing?"

The physical presence test. Living & working in a foreign country or countries for 330 days out of a 365 day period.

Snark - right there on the form and in the instructions. Only ask once

https://accountants.intuit.com/community/tax-talk/discussion/missionaries-working-abroad-feie/00/299...

[SaoneFinancial]

Not the question! But good try! 

[qbteachmt]

"Not the question! But good try!"

Then what is the question, specifically? You asked: "Is there some exemption I'm not aware of?"

I recommend you don't refer to any other tax year filing or other taxpayer filings, until you determine what applies to your taxpayer this time, specifically. That's really all that applies, each and every year. That will also help determine, if the facts and circumstances have not changed, if your taxpayer's previous year(s) filings are wrong and should be amended. Because that seems to be part of what you are trying to resolve: "The previous CPA took the FEIE on their 2022 tax returns - although the client did not pay taxes in the foreign country of residence. My understanding is that in order to take the FEIE you must report and pay taxes to the foreign country where you reside."

[sjrcpa · Accepted solution]

"My understanding is that in order to take the FEIE you must report and pay taxes to the foreign country where you reside"

Only applies if you a bona fide resident of a country with an income tax,