What is Earned Income?

Earned income is the income earned for PERSONAL SERVICE PERFORMED. Salaries and wages, commissions, bonuses, professional fees, and tips are considered "Earned Income".  The following table lists the income by type:

Types of Income

In addition to the types of earned income listed above, certain non-cash income and allowances or reimbursements are considered earned income.  These items of income includes:

Non-cash Income:

The fair market value of property or facilities provided to you by your employer in the form of lodging, meals, or use of a car is earned income.

Allowances or Reimbursements:

Earned income includes allowances or reimbursements you receive, such as the following amounts:

•  Cost of living allowances
•  Overseas differential
•  Family allowance
•  Reimbursement for education or education allowance
•  Home leave allowance
•  Quarters allowance
•  Reimbursement for moving or moving allowance (unless excluded from income)

ONLY Earned Income, both cash and non-cash (and certain variable income), earned from personal services performed in a "Foreign TAX HOME" where either "PHYSICAL PRESENCE" or "BONA FIDE RESIDENCY" tests are met can be qualified for exemption under section 911 of the Internal Revenue Code.

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Last modified: February 19, 2007