What is the foreign earned income exclusion?

Expatfile tax questions illustration
Expatfile tax questions illustration

The Foreign Earned Income Exclusion is one of the tax breaks a US expat can claim. The foreign earned income exclusion allows qualifying Americans who live and work abroad to exclude a certain amount of their foreign earned income (foreign wages, salaries, or self-employment income) from income that is subject to US federal taxes. In 2020, qualifying Americans can exclude up to $107,600 of foreign earned income, meaning this amount will not be subject to US federal tax.

In order to qualify for the foreign earned income exclusion, a taxpayer must have a tax home in a foreign country, as well as pass either the bona fide residency or physical presence test.

Read more about the foreign earned income exclusion!

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