Federal tax benefits for U.S. citizens working abroad
U.S. citizens working abroad are generally taxed on their worldwide income, however, if their tax home is a foreign country and they meet other foreign country residence or physical presence tests they may be able to exclude a portion of their foreign earned income and also exclude certain housing costs from their gross income.
The foreign earned income exclusion amount is $102,100 for 2017 and is scheduled to increase to $104,100 for 2018.
The excludable housing cost amount is the excess of the year’s allowable housing expense over a base amount ($16,656 in 2018). However, the limitation is adjusted for higher cost geographic areas, relative to housing costs in the U.S. Here’s a list of high-cost areas just provided in IRS Notice 2018-33: https://www.irs.gov/irb/2018-17_IRB#NOT-2018-33
Please contact our office if you would like more information regarding these foreign income exclusions. Read more about the author, Barry Groebel here.