The Foreign Earned Income Exclusion (FEIE) allows U.S. citizens and resident aliens who live and work outside the U.S. to exclude part of their foreign earned income from U.S. federal income tax.
➡️ For tax year 2024, the maximum exclusion is $126,500 per qualifying person.
Who Qualifies?
To claim the FEIE, the taxpayer must:
- Have foreign-earned income
(wages or self‑employment income earned while working abroad) - Have a tax home in a foreign country
- Meet one of these tests:
Bona Fide Residence Test
- Lived in a foreign country for an entire tax year
Physical Presence Test
- Were physically present in a foreign country for at least 330 full days during any 12‑month period
💰 What Income Can Be Excluded?
✅ Can be excluded:
- Wages, salaries, commissions, and bonuses earned abroad
- Self‑employment income earned abroad
(Self‑employment tax still applies)
🚫 Cannot be excluded:
- Pensions or annuities
- Interest, dividends, or capital gains
- Income earned while physically working in the U.S.
🧾 How to Claim the Exclusion
- File Form 2555 with Form 1040
- Report all income, then calculate and exclude the allowed amount on Form 2555
- The exclusion reduces taxable income, not total income [irs.gov]
📌 Example
A U.S. citizen works in France for all of 2024 and earns $100,000 in wages.
- They meet the Bona Fide Residence Test
- The full $100,000 can be excluded using Form 2555
✅ Their taxable income is reduced, which may lower or eliminate U.S. income tax.
💡 FilingTips
- ✅ You must still file a U.S. tax return, even if all income is excluded
- ✅ You may also qualify for the foreign housing exclusion or deduction if you paid housing costs abroad.