Is FEIE a deduction?

The Foreign Earned Income Exclusion (FEIE, using IRS Form 2555) allows you to exclude a certain amount of your FOREIGN EARNED income from US tax. You are married filing jointly, have two children and you take the standard deduction ($24,800) and child tax credit ($4,000 for two children).

Do I qualify for FEIE?

To be eligible for the foreign income exclusion, an expatriate must meet all four of the following requirements: Must have foreign earned income. Must have a tax home in a foreign country. Meet either the bona fide residence test or physical presence test.

Can you claim both FEIE and FTC?

It is possible to use both the FEIE and the FTC in the same year. But using both while in a country whose tax rate is higher than that of the US is a waste of time and energy. It is absolutely possible to pay higher taxes by using the FEIE followed by the FTC than it would have been to use the FTC alone.

How is FEIE calculated?

You would compute your exclusion this way: For tax year 2020, the maximum foreign earned income exclusion amount is the lesser of the foreign income earned or $107,600 per qualifying person. ($107,600 ÷ $150,000) x ($50,000 + $7,065) = $40,935 of expenses allocable to excluded income.

What is the revoked exclusion rule for FEIE?

The revoked exclusion rule is designed to prevent taxpayers abroad from switching each year between FEIE and FTC. Simply put, if you had been using FEIE then switch to using FTC, then you are prohibited from switching back to use FEIE for a period of five years.

When do you have to file US taxes as an expat?

2021 Expat tax filing dates Generally, expats receive an automatic 2-month extension to file and pay. When you are abroad on the regular April tax deadline, you must file your US tax return. by June 15, 2021. If you still need more time, maybe to qualify for the FEIE, you can request an extension to October 15.

How does the FEIE and the housing exclusion work?

The FEIE and the housing exclusion are elected by actually using them on form 2555 in a return. The first time you complete form 2555, you have effectively elected to exclude either your foreign income or housing or both, depending on how you completed the form.

How long do you have to be in a foreign country to qualify for FEIE?

Expats qualify for the FEIE under the Physical Presence Test (PPT) if they spend at least 330 days in a 365-day period in a foreign country or foreign countries. This requirement is often misstated as “no more than 35 days in the US”.