Foreign Earned Income Exclusion

The United States taxes citizens and residents on their worldwide income. Citizens and residents living and working outside the U.S. may be entitled to a foreign earned income exclusion that reduces taxable income. For 2012, the maximum exclusion is $95,100 per taxpayer (future years indexed for inflation). In addition, the taxpayer may exclude housing expenses in excess of 16% of this maximum (i.e., $40.11 per day in 2010), but with limits. The exclusion is available only for wages or self-employment income earned for services performed outside the U.S. The exclusion is claimed on IRS Form 2555.

Read more about Foreign Earned Income ExclusionQualification, Amount of Exclusion, Form 2555 Required, Additional References

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