What is Foreign earned income exclusion?
In short
United States citizens and residents who live and work abroad can exclude foreign earned income up to an annual limit ($130,000 for 2025) if their tax home is abroad and they meet the bona fide residence or physical presence test.
Key takeaways
- The physical presence test requires 330 full days abroad in a 12-month period.
- A housing exclusion or deduction can also apply.
- Foreign tax credit isn't allowed on excluded income, and remaining income is taxed at the rates that would apply without the exclusion.
Where it's tested
TCP: Multi-Jurisdictional & International Basics — study notes, a five-minute revision sheet and practice questions.
Practise: 3 questions
Question 1 of 3 · 0 answered
A US citizen works abroad all year. To elect the foreign earned income exclusion, the taxpayer must, among other requirements, meet which test?