Foreign earned income exclusion

The IRS says the person must have foreign earned income, a tax home in a foreign country and meet either the bona fide residence test or the physical presence test. The physical presence test requires presence in a foreign country or countries for at least 330 full days during any period of 12 consecutive months. A person whose abode remains in the United States does not have a foreign tax home.

The maximum amount is adjusted each year for inflation, so check the current IRS figure. A foreign housing exclusion or deduction may also apply. The exclusion is claimed with Form 2555, and it does not reduce self-employment tax.

Income excluded this way cannot also be used for the foreign tax credit. The exclusion does not remove the duty to file a US return.

Not to be confused with

• Foreign tax credit. The credit offsets foreign tax against US tax on income that remains taxable, and cannot be used on excluded income.
• Substantial presence test. The 330-day test counts days abroad for this exclusion, while the substantial presence test counts days in the United States for residence.

Sources

• Foreign earned income exclusionOfficial guidance
• Foreign Tax CreditOfficial guidance

Related

Countries covered

General

Sources

2 sources

Tax year

Current rules as checked

Review

Not professionally reviewed
Sources checked November 8, 2026