why: so the government won’t be able to use your money for whatever the fuck they’re planning for the next 4 years.
as a traveler, none of my money has been funding Israel, for example.
one-step method: you basically fill out one extra tax form called FEIE while you’re doing your taxes, write down the dates you were outside of the country, and then since you aren’t in the country and are not receiving any services from the US, you don’t have to pay income tax up to a certain amount (it’s a little over 125k this year).
The exemption only applies to earned income, meaning you cannot apply any of that $125k to stuff like investment returns, dividends, royalties, or rents collected.
That’s right.
The Foreign Earned Income Exclusion specifically applies to earned income, and does not apply to unearned income.