When can you take foreign earned income exclusion?

To benefit from the Foreign Earned Income Exclusion, the taxpayer must meet one of the following criteria: Works full time in a foreign country for an entire calendar year—known as the Bona Fide Residence Test. Works outside of the United States for at least 330 of any 365 day period—known as the Physical Presence Test.

Can I take both foreign income exclusion and Foreign Tax Credit?

While you cannot take the Foreign Earned Income Exclusion and Foreign Tax Credit on the same dollar of income, you can take both in the same year. You could use the Foreign Earned Income Exclusion to shield the first $107,600 (2020 figure) from U.S. taxation.

What is the foreign earned income exclusion ( FEIE )?

Foreign Earned Income Exclusion (FEIE) What is the Foreign Earned Income Exclusion? The Foreign Earned Income Exclusion (FEIE) is an exemption from double IRS income taxation aimed as US citizens or green card holders who are working outside of the United States of America, as long as they meet certain criteria.

What’s the maximum amount you can exclude from FEIE?

You can use the Foreign Housing Exclusion if your housing costs total more than 16% of that year’s FEIE. To calculate the maximum amount you can exclude, you’d multiply that year’s maximum income exclusion by 0.3 to get 30% of the full exclusion amount. So, for 2020, you’d take $107,600 x 0.3 = $32,280.

What does FEIE stand for in tax law?

The Foreign Earned Income Exclusion (FEIE) is an exemption from double IRS income taxation aimed as US citizens or green card holders who are working outside of the United States of America, as long as they meet certain criteria. Usually, US citizens and resident aliens of the United States who live abroad are taxed on worldwide income.

Do you have to pass physical presence test for FEIE?

To use the Foreign Earned Income Exclusion, you need to pass either the Physical Presence or Bona Fide Residence Tests. As an American abroad, for 2018 tax year you could exclude up to $104,100 by using this exclusion. As well as you can take advantage of foreign housing deduction.