Foreign Housing Exclusion

The foreign housing exclusion goes hand-in-hand with the foreign earned income exclusion. According to section 911(a) of the federal tax code, a qualified individual under either the bona fide residence test or the physical presence test will be able to exclude from the gross income the housing amount in a foreign country provided for by the employer. Note that "provided for by the employer" does not require that the employer actually procure the housing. If the housing is paid for out of wages paid by the employer, this will meet the test. However, housing expenses in excess of the wages or earnings from self-employment would not qualify.

The tax code defines the “housing amount” as the total of all qualified housing expenses less the “base housing amount.” As a result, it is then important to define what is considered qualified housing expenses as well what the IRS mean by the base housing amount.

Read more about Foreign Housing Exclusion:  Qualification, Second Foreign Household, Foreign Housing Deduction, Couples, Limitations, Conclusion, References

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