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Foreign Earned Income Exclusion - Am I Eligible to Claim Either the Exclusion or the Deduction?

American taxpayers who live and/or work abroad may be able to exclude all or part of their foreign earned wages and self-employment income from their U.S. federal income tax through a provision called the Foreign Earned Income Exclusion.

Those who qualify who qualify are eligible to exclude up to the maximum amount in foreign earned income annually, depending on the year of tax filing. This amount changes each year, as listed below:

Maximum Foreign Earned Income Exclusions
Tax Year Foreign Earned Income Exclusion
2007 $85,700
2008 $87,600
2009 $91,400
2010 $91,500
2011 $92,900
2012 $95,100
2013 $97,600
2014 $99,200
2015 $100,800
2016 $101,300
2017 $102,100

To claim the foreign earned income exclusion, the foreign housing exclusion, or the foreign housing deduction, you must have foreign earned income, your tax home must be in a foreign country, and you must be one of the following:

  • A U.S. citizen who is a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year,
  • A U.S. resident alien who is a citizen or national of a country with which the United States has an income tax treaty in effect and who is a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year, or
  • A U.S. citizen or a U.S. resident alien who is physically present in a foreign country or countries for at least 330 full days during any period of 12 consecutive months.

To determine whether you can claim the exclusion or deduction please begin with question 1

1.  Do you have foreign earned income?
     a.  Yes. Go to question 2.
     b.  No. You CANNOT claim the foreign earned income exclusion, the foreign housing exclusion, or the foreign housing deduction.

2.  Is your tax home in a foreign country?
     a.  Yes. Got to question 3.
     b.  No. You CANNOT claim the foreign earned income exclusion, the foreign housing exclusion, or the foreign housing deduction.

3.  Are you a U.S. citizen?
    a.  Yes. Go to question 4.
     b.  No. Are you a U.S. resident alien?

          i.  Yes. Are you a citizen or national of a country with which the United States has an income tax treaty in effect?
               o  Yes. Go to question 4.
               o  No. Go to question 5.

         ii.  No. You CANNOT claim the foreign earned income exclusion, the foreign housing exclusion, or the foreign housing deduction.

4.  Were you a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year?
    a.  Yes. You CAN claim the foreign earned income exclusion and the foreign housing exclusion or the foreign housing deduction.
     b.  No. Go to question 5.

5.  Were you physically present in a foreign country or countries for at least 330 full days during any period of 12 consecutive months?
    a.  Yes. You CAN claim the foreign earned income exclusion and the foreign housing exclusion or the foreign housing deduction.
     b.  No You CANNOT claim the foreign earned income exclusion, the foreign housing exclusion, or the foreign housing deduction.


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