Foreign earned income exclusion

FOREIGN EARNED INCOME

Exclusion

 

 

If you are a U.S. citizen or a U.S. Greencard holder and you live abroad, you are taxed on your worldwide income. However, you may qualify to be excluded from income up to $99,200 (for 2014) of your foreign earnings. In addition, you can exclude or deduct certain foreign housing amounts.

 

 

Foreign earned income exclusion amounts

 

To claim the foreign earned income exclusion, the foreign housing exclusion, or the foreign housing deduction, you must meet all of the following requirements.

 

  1. Your tax home must be in a foreign country.
  2. You must have foreign earned income.
  3. You must be either:
  • a U.S. citizen who fulfills the bona fide residency test; or
  • a U.S. Greencard holder who is a citizen or national of a country with which the U.S. has an income tax treaty in effect (the Netherlands and the U.S. have concluded such treaty) and who fulfills the bona fide residency test; or
  • a U.S. citizen or a U.S. Greencard holder who fulfills the physically presence test

 

Use this diagram from the IRS Publication 54 to check whether you can claim either Exclusion or the Deduction.

 

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