Foreign Earned Income Exclusion Guide

Foreign Earned Income Exclusion (FEIE) allows qualifying taxpayers to exclude foreign wages from US taxation: 2024 Exclusion Amount: Up to $126,500 of foreign earned income per taxpayer. Qualifying Tests (must meet one): Physical Presence Test: Present in foreign country(ies) for 330 full days during any 12-month period. Days in transit don't count toward the 330 days. Bona Fide Residence Test: Bona fide resident of foreign country for uninterrupted period including entire tax year. More subjective test based on intent and ties. Eligible Income: Included: Wages, salaries, professional fees, self-employment income for services performed abroad. Excluded: Investment income, rental income, pensions, social security benefits. Tax Home Requirement: Tax home must be in foreign country. Generally, where your main place of business is located. Calculation: Form 8911: Use to claim exclusion. Prorated Amount: If qualifying period is less than full year. Foreign Housing Exclusion: Additional exclusion available for qualifying housing costs. Key Considerations: Filing Requirement: Must file US return even if all income excluded. State Taxes: Some states don't recognize FEIE. Social Security: Self-employment income still subject to SE tax. Timing: Election to use FEIE affects future years.