Directions Using the tax software, complete the tax return, including Form 1040 and all appropriate forms, schedules, or worksheets. Answer the questions following the scenario. Note: When entering Social Security numbers (SSNs) or Employer Identification Numbers (EINs), replace the Xs as directed, or with any four digits of your choice.

Interview Notes

- SSN: 501-00-XXXX

Yolanda is a U.S. citizen, single and has no children. She has lived and worked in Germany since February 1, 2016. She loves her life in Germany and did not return to the U.S. since she moved there. She has no intentions of returning to the U.S. Therefore, she does not maintain an address in the U.S.

She considers herself a resident of Germany. She shares a two-bedroom apartment with her roommate at 491 Wolframstrasse, 35510 Bad Cannstatt, a city district of Stuttgart, Germany.

Income:

Yolandas visa type: Unlimited.

- Yolanda works at the U.S. Consulate and has a Form W-2 for her salary. She earned $60,000 in wages and paid $7,000 in withholding.

- Yolanda loves to shop. In 2018, she decided to get a part-time job at a department store on the weekends so she could use the employee discount on her purchases. Her part-time job with the department store was located at 27-29 Konigstrasse, 70173 Stuttgart, Germany.

- Yolanda earned an equivalent of $3,000 in wages and paid taxes totaling $600 when converted to U.S. dollars. Her taxes were paid to Germany as she earned her income. - Yolanda opened a checking and savings account at a German bank. She earned $150 of interest (converted to U.S. dollars) at the Bank of Stuttgart. She paid foreign tax to Germany on this interest income in the amount of 38.5 euro. The exchange rate on the date she paid the tax was 1 U.S. Dollar (USD) = 1.17 Euro.

- Yolanda was not required to file FinCen Form 114 and she did not receive a distribution, was not a grantor of, nor was she a transferor to a foreign trust.

Yolanda did not itemize in 2017 and does not have enough deductions to itemize in 2018.

Yolanda was covered under a health care plan the entire year that was purchased through her job with the U.S. Consulate.

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 or Form 2555-EZ.

	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.

8. Yolanda meets the requirements of the bona fide residence test and can exclude her foreign earned income.

True

False

9. Which of the following statements is true? Yolanda does not have to report her interest income from the Bank of Stuttgart because:

	A. Form 1099-INT was not issued.

	B. Taxes were already paid on the income.

	C. It qualifies for foreign earned income exclusion.

	D. None of the above. She must report her worldwide income, which includes her interest income.

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

rate, CM: Visit the IRS website at 1 efile FAST! Use 510-00-XXXX OMB No. 1545-0008 b Employer identification number (EIN) 1 Wages, tips, other ccmpensaion 2 Foderal income tax withheld 60,000.00 ty wages 60,000.00 7,000.00 3,720.00 870.00 42-500XXXX c Employer's name, address, and ZIP code US CONSULATE 3000 BAHNHOFSTRASSE 87600 KAUFBEUREN, GERMANY 5 Medicare wages and tips 6 Medicare tax withheld 60,000.00 7 Social security tips 8 Allocated tips d Control number 9 Venfication code 0 Dependent care benetits e Employee's first name and initia Last name 11 Nonqualified plans 12a See instructions for box 12 5,400.00 YOLANDA LAWSON 491 WOLFRAMSTRASSE 35510 BAD CANNSTATT STUTTGART, GERMANY 12b 14 Other 12C 12d fEmployee's address and ZIP code 15 Stae Employer's state ID number 16 State wages, tips, ete 17 State income tax 18 Local wages, tips, ete.19 Local income tax 20 Locality Wage and Tax Statement Department of the Treasury-Internal Revenue Service 201 Copy B-To Be Filed With Employee's FEDERAL Tax Return. This information is being furnished to the Internal Revenue Service