Tax exclusion for American Expats

Question

1. I am an American Citizen.

2. I work remotely for a company based in the US.

3. Working remotely means that I can live wherever I want.

4. If I move to a foreign country and live full-time there and establish residency, do I qualify for the ~100k tax exclusion?

5. Note that the company that I work for is a US company, not foreign. That's the main area of confusion.

Answer 1

Where your employer is is of no consequence. Income is earned where you earn it.

So yes, you'll be able to use the FEIE in this scenario, but you will also be on the hook for the local taxes for the same income and your employer may be on the hook for the payroll taxes on your behalf. Depending on the jurisdiction this may be a significant deterrent for your employer and they may choose to not allow this arrangement.

If you're a 1099 contractor, then the employer wouldn't care, but you would be on the hook for the local taxes as a self-employed person (i.e.: like in the US, you'll be responsible for both yours and the employer's share of the payroll tax load).

There's also the immigration question - you have to have the right to work in the new country, which is not a trivial thing to get (some places make it easier than others, the US is for example notoriously difficult in this regard).