If you are a U.S. citizen or a resident alien of the United States and you live abroad, you are taxed on your worldwide income. However, you may qualify to exclude from income up to $104,100 of your foreign earnings. In addition, you can exclude or deduct certain foreign housing amounts.
If both you and your spouse work abroad and each of you meet the requirements for the foreign earned income and housing exclusions, you and your spouse can exclude as much as $208,200 if filing a joint return.
To claim the foreign earned income and housing exclusion, you must meet all three of the following requirements.
- Your tax home must be in a foreign country.
- You must have foreign earned income.
- 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.
- A U.S. citizen or a U.S. resident alien who is physically present in a foreign country or countries for at least 330 full days during any period of 12 consecutive months.
