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Basically, the internal revenue service recognizes that income earned abroad is taxed via the resident country, and become excluded from taxable income the particular IRS if ever the proper forms are reported. The source of the income salary paid for earned income has no bearing on whether it is U.S. or foreign earned income, but where in order to or services are performed (as in example of employee earning a living for the Ough.S. subsidiary abroad, and receiving his pay check from the parent U.S. company out of the U.S.).

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