Federal tax benefits for U.S. citizens working abroad

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.