**Question:**US taxpayers legally residing in a foreign country from January 2nd until December 12th of the same year earning $108,700 of income in 2021 qualify to exclude that amount of income from US taxation.- ○ True- ○ False**Explanation:**The image presents a multiple-choice question that examines the understanding of US tax exemptions for citizens living abroad. Specifically, it relates to the Foreign Earned Income Exclusion (FEIE), which allows US taxpayers to exclude a certain amount of foreign-earned income from U.S. taxation, provided they meet specific residency requirements and income thresholds. In this question, the focus is on determining whether someone residing outside the US for most of the year 2021 qualifies for this exclusion based on the provided income figure and residency time frame. **Understanding Hobby vs. Business for Tax Purposes**An activity considered a hobby has its expenses deemed not deductible. However, this presumption can be challenged if the activity demonstrates a profit in three out of the five previous years. For activities involving horses, the threshold is reduced to showing a profit in two out of seven years. When these conditions are met, the burden of proof for establishing the activity as a non-trade or business shifts to the IRS. **Quiz Question:**- An activity considered a hobby and thus its expenses are not deductible. However, if the activity shows a profit three out of five previous years (two out of seven if involving horses), the presumption is rebuttable and the burden of proof shifts to the IRS. - ○ True - ○ FalseThis question helps individuals understand the criteria under which an activity qualifies as a business for tax deduction purposes.

Answered: US taxpayers legally residing in a…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Question

**Understanding Hobby vs. Business for Tax Purposes**

An activity considered a hobby has its expenses deemed not deductible. However, this presumption can be challenged if the activity demonstrates a profit in three out of the five previous years. For activities involving horses, the threshold is reduced to showing a profit in two out of seven years. When these conditions are met, the burden of proof for establishing the activity as a non-trade or business shifts to the IRS.

**Quiz Question:**

- An activity considered a hobby and thus its expenses are not deductible. However, if the activity shows a profit three out of five previous years (two out of seven if involving horses), the presumption is rebuttable and the burden of proof shifts to the IRS.

- ○ True
- ○ False

This question helps individuals understand the criteria under which an activity qualifies as a business for tax deduction purposes.

Expert Solution

Step 1

Here asked for Multi question we will solve for first question for you. If you need additional kindly resubmit the question with mention the required details.

Expat Rules for US Resident

When you are a resident of the US, you must follow the same procedures for reporting and paying income tax whether you reside in the country or overseas. You also are required to disclose your worldwide income, regardless if you are a legal resident or a citizen of another nation. If you fail to submit your US or provincial taxes while living abroad, just like any other US resident, you may be subject to a penalty despite when you not owe any taxes. A failure to submit penalties might cost you thousands of dollars, prevent you from receiving advantages that would lower your tax liability, or both.

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions