EARNED INCOME FROM SOURCES WITHOUT THE UNITED STATES.

SEC. 204. EARNED INCOME FROM SOURCES WITHOUT THE UNITED STATES. (a) Amendment of Section 116 (a) (2).—Section 116 (a) (2) (relating to exclusion from gross income of earned income from sources without the United States) is hereby amended by adding at the end thereof the following new sentences: “If the 18-month period includes the entire taxable year, the amount excluded under this paragraph for such taxable year shall not exceed $20,000. If the 18-month period does not include the entire taxable year, the amount excluded under this paragraph for such taxable year shall not exceed an amount which bears the same ratio to $20,000 as the number of days in the part of the taxable year within the 18-month period bears to the total number of days in such year.” (b) Withholding of Tax on Wages of Citizens Outside the United States.— So much of section 1621 (a) (8) (relating to the definition of wages) as precedes subparagraph (B) thereof is hereby amended to read as follows: “(8) (A) for services for an employer (other than the United States or any agency thereof) (i) performed by a citizen of the United States if, at the time of the payment of such remuneration, it is reasonable to believe that such remuneration will be excluded from gross income under section 116 (a), or (ii) performed in a foreign country by such a citizen if, at the time of the payment of such remuneration, the employer is required by the law of any foreign country to withhold income tax upon such remuneration, or”. (c) Effective Date.—The amendment made by subsection (a) shall apply with respect to taxable years ending after December 31, 1952, but only to amounts received after such date. In the case or any taxable year beginning in 1952 and ending in 1953 the exclusion of amounts received after December 31, 1952, shall not exceed an amount which is the same proportion of $20,000 as the number of days 67 Stat. 619 in such taxable year after December 31, 1952, is of 365 days. The amendments made by subsections (a) and (b) shall not affect the liability of any employer to deduct and withhold the tax imposed by section 1622 in the case of any remuneration paid before the first day of the first month beginning more than ten days after the date of the enactment of this Act.