Discuss briefly the options available for avoiding double taxation for the U.S. citizen earning income from sources outside the United States
Answer: A U.S. citizen earning income from sources outside the United States may utilize the foreign tax credit whereby income taxes paid to foreign countries are subtracted from the taxpayer's U.S. income tax liability. Alternatively, the U.S. taxpayer who qualifies may claim the foreign-earned income exclusion whereby up to $92,900 in 2011 of earnings from personal services rendered in a foreign country is excluded from gross income. To qualify for the foreign-earned income exclusion, the taxpayer must meet the physical presence test or the bona fide residence test.