Intuit Academy Tax Practice Exam

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What must U.S. citizens meet to exclude a certain amount of foreign earned income?

Residency Test
Physical Presence Test
Income Level Test
Employment Test

The correct answer is: Physical Presence Test

To exclude a certain amount of foreign earned income, U.S. citizens need to meet the Physical Presence Test. This test is designed for individuals who live and work in a foreign country and specifies that the taxpayer must be physically present in a foreign country for at least 330 full days during a consecutive 12-month period. Successfully meeting this requirement allows the taxpayer to benefit from the Foreign Earned Income Exclusion, which provides significant tax relief. While the Residency Test is another method that can qualify individuals for the exclusion, the Physical Presence Test is often a more straightforward option for those who are working abroad. The other options, such as the Income Level Test and Employment Test, are not established requirements for the exclusion and do not influence the eligibility criteria for excluding foreign earned income.