What is Foreign Earned Income Exclusion?
Allows qualifying US expats to exclude up to $126,500 (2024) of foreign earned income from US taxation.
Definition
The Foreign Earned Income Exclusion (FEIE) allows US citizens and resident aliens who live abroad to exclude a certain amount of their foreign earned income from US federal income tax. For 2024, the maximum exclusion is $126,500. To qualify, you must meet either the bona fide residence test or physical presence test.
Who Needs to Know This?
US citizens and resident aliens living and working abroad who meet either the bona fide residence test (full tax year in foreign country) or physical presence test (330 days abroad in 12-month period).
Key Deadline
Claimed on annual tax return using Form 2555
Potential Penalties
N/A - this is a benefit, not a requirement
Related Forms
Common Mistakes to Avoid
- 1Thinking you can use both FEIE and FTC on the same income
- 2Not meeting the physical presence test correctly (330 days)
- 3Including non-qualifying income like investment income
- 4Revoking the election without understanding the 5-year waiting period
Related Terms
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