US Income Tax & Capital Gains Tax Exclusion for Foreign Workers ?

Question

I understand that in 2007, there is a $87,500 tax exculsion for (ie western employees). Is this true ? Is this gross income or adjusted income?

Also, do americans have to pay capital gains tax earned overseas?

(ie. Say i invested my money in an IRA in UAE for the past 3 years and have earned 30% return on my investments and after the 3 years return back to the US. Do I have to pay any taxes? Can I transfer the money back into my US bank account?) Please advise?

Thanks.

Answer 1

It's Foreign EARNED income.
Wages and self-employment only.

That IRA money is a not earned income.
Yes, Americans pay capital gains tax on money earned abroad--the US tax return is WORLDWIDE income.

Answer 2

Why placed your money into banks and investments in case you may go through loss and all your income is stolen from you? Do you understand how lots stable investments do for the financial gadget? Are you going to have the government supply back all investment losses on the top of the 365 days, too? Over 50% pay 0 on earnings earnings and an mind-blowing style of them do no longer artwork already. Did you pass all your econ instructions in hardship-loose college?

Answer 3

That foreign IRA isn't an IRA for US tax purposes. It's treated as any other investment and any gain is taxable in the year that it's realized. The contributions are not deductible on your US return.