If you are living and working abroad, you may be entitled to exclude up to $120,000 of your foreign income from your 2023 income tax return. You may also qualify to exclude certain foreign housing amounts.
What are the requirements?
To claim the exclusion, you must meet the following requirements:
- You must meet the Tax Home Test
- You must have foreign earned income
- You must meet the Bona Fide Residence or Physical Presence test
Tax Home Test
To meet this test, your tax home must be in a foreign country, or countries throughout your period of residence. For this purpose, your period of physical presence is the 330 full days during which you were present in a foreign country, or countries, not the 12 consecutive months during which those days occurred.
Your tax home is your regular or principal place of business, employment, or post of duty, regardless of where you maintain your family residence.
Bona Fide Residence Test
To meet this test, you must be one of the following.
- A U.S. citizen who is a bona fide resident of a foreign country, or countries, for an uninterrupted period that includes an entire tax year (January 1 - December 31, if you file a calendar year return).
- A U.S. resident alien who is a citizen or national of a country with which the United States has an income tax treaty in effect and who is a bona fide resident of a foreign country, or countries, for an uninterrupted period that includes an entire tax year (January 1–December 31, if you file a calendar year return).
Physical Presence Test
To meet this test, you must be a US citizen or resident alien who is physically present in a foreign country, or countries, for at least 330 full days during any period of 12 months in a row. A full day means the 24-hour period that starts at midnight.
To figure 330 full days, add all separate periods you were present in a foreign country during the 12-month period. The 330 full days can be interrupted by periods when you are traveling over international waters or are otherwise not in a foreign country.
Income from working abroad as an employee of the U.S. Government does not qualify for either of the exclusions or the housing deduction. Don't file Form 2555.