William Webster is a U.S. citizen, single and has no children. He has lived and worked in

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• William Webster is a U.S. citizen, single and has no children. He has lived and worked in Finland since February 1, 2012. He does not maintain an address in the U.S and has no intentions of returning. • He considers himself a resident of Finland. He rents an apartment at 1001 Rakunnanjie, 00550 Helsinki, Finland.

• Income: – William’s visa type: Unlimited. – William works at the U.S. Consulate and has a Form W-2 for his salary. – In 2020, William decided to get a part-time job as a barista at a local coffee shop, located at 32100 Bulevardi, 10000 Helsinki, Finland. William earned an equivalent of $5,000 in wages and paid taxes totaling $300 when converted to U.S. dollars. His taxes were paid to Finland as he earned his income. – William earned $195 (converted to U.S. dollars) of interest at Nordian-Actavio Bank. He paid foreign tax to Finland on this interest income in the amount of 52.0 Euro. The exchange rate on the date he paid the tax was 1 U.S. Dollar (USD) = 0.909 Euro.

• William was not required to file FinCen Form 114 and he did not receive a distribution, was not a grantor of, nor was he a transferor to a foreign trust.

• William did not itemize in 2019 and does not have enough deductions to itemize in 2020.

• William received a $1,200 Economic Impact Payment (EIP) in April 2020.

7. The amount of William’s foreign earned income exclusion is $________.

8. Which of the following statements is true? William does not have to report his interest income from Nordian-Actavio Bank because:

a. It qualifies for foreign earned income exclusion.

b. Taxes were already paid on the income.

c. Form 1099-INT was not issued.

d. None of the above. He must report his worldwide income, which includes his interest income.

9. Which sources of William’s income are classified as passive category income?

a. Wages from the U.S. Consulate

b. Wages from the coffee shop c. Interest income from Nordian-Actavio Bank

d. None of the above

10. Which source of William’s income qualifies for the foreign earned income exclusion?

a. Wages from the U.S. Consulate

b. Wages from the coffee shop

c. Interest income from Nordian-Actavio Bank d. None of the above

11. William does not meet the requirements of the bona fide residence test and cannot exclude his foreign earned income.

a. True

b. False

12. Which of the following statements are false?

a. William can take the foreign tax credit for the income taxes paid on his interest income from Nordian-Actavio Bank and has to file Form 1116, Foreign Tax Credit.

b. William can claim the foreign earned income exclusion of $5,000 from his part-time job at the coffee shop. Therefore, he cannot take the foreign tax credit for the $300 income taxes from his part-time job at the coffee shop.

c. William can claim both the foreign tax credit for the $300 withholding taxes paid to Finland and exclude the $5,000 foreign earned income from his part-time job at the coffee shop.

d. William has both passive and general foreign income.

13. William must include the amount of foreign tax paid to Finland as withheld federal income taxes.

a. True

b. False

14. Which of the following statements is true?

a. The foreign earned income exclusion is voluntary.

b. The election for foreign earned income exclusion is made by completing Form 2555, Foreign Earned Income.

c. Once the election is made to exclude foreign earned income, that choice remains in effect for that year and all later years until it is revoked. d. All of the above.

15. What is the amount of foreign taxes paid on interest income, converted to U.S. dollars? $________.