If you meet certain requirements, you may qualify for the foreign earned income and foreign housing exclusions and the foreign housing deduction.
If you are a U.S. citizen or a resident alien of the United States and you live abroad, you are taxed on your worldwide income. However, you may qualify to exclude from income up to an amount of your foreign earnings that is now adjusted for inflation ($91,400 for 2009, $91,500 for 2010, $92,900 for 2011, $95,100 for 2012). In addition, you can exclude or deduct certain foreign housing amounts.
You may also be entitled to exclude from income the value of meals and lodging provided to you by your employer. Refer to Exclusion of Meals and Lodging in Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad, and Publication 15-B, Employer's Tax Guide to Fringe Benefits for more information.
- Requirements
- Can I Claim the Exclusion or Deduction?
- Tax Home In A Foreign Country
- Bona Fide Resident test
- Physical Presence Test
- Exceptions to Tests
- Figuring The Exclusion
- Choosing The Exclusion
- Revocation
- Which Form to File
- Foreign Housing Exclusion or Deduction
- Individual Retirement Arrangements
- Extension to Claim Foreign Earned Income Exclusion
- Application of Foreign Earned Income Exclusion and the Combat Zone Exclusion to Civilian Contractors Working in Combat Zones (PDF)
If you live in a foreign country where you must pay foreign income taxes, you can avoid double taxation by taking foreign tax credits which offset your US tax on that foreign income dollar for dollar. We have over 30 years experience in assisting US expatriates, green card holders and nonresidents pay the lowest US income taxes possible. We can often help you avoid having to pay US state taxes also. Email us at ddnelson@gmail.com or visit our websites at www.TaxMeLess.com or www.expatattorneycpa.com
