IRS Form 2555: Foreign Earned Income Exclusion
U.S. citizens and resident aliens living abroad can exclude up to $126,500 (2024) of foreign earned income from U.S. taxation using Form 2555. If you've been paying U.S. tax on foreign income without claiming the FEIE, you may be entitled to significant refunds through amended returns.
FEIE Qualification Tests
BONA FIDE RESIDENCE TEST: You must be a bona fide resident of a foreign country (or countries) for an uninterrupted period that includes an entire tax year (January 1 — December 31). No specific day-count requirement — the IRS looks at intention, nature, and length of stay.
PHYSICAL PRESENCE TEST: You must be physically present in a foreign country (or countries) for at least 330 full days during any consecutive 12-month period. Days in transit over international waters don't count toward U.S. days. Brief trips to the U.S. are allowed as long as you stay under the 35-day limit.
TAX HOME TEST: Your tax home must be in a foreign country. Your tax home is generally your main place of business or employment — not where your family lives or where you're registered to vote.
EARNED INCOME ONLY: The FEIE only covers EARNED income — wages, salaries, professional fees, and self-employment income. It does NOT cover interest, dividends, capital gains, pensions, rental income, or Social Security.
FEIE Limits & Housing Deduction
2024 Exclusion Limit
$126,500 of foreign earned income can be excluded from U.S. taxation. Married couples both working abroad can each claim up to the limit.
2025 Exclusion Limit
$130,000 (projected). The limit is adjusted annually for inflation. Prior-year limits apply when filing amended returns for those years.
Housing Exclusion
In addition to the FEIE, you can exclude or deduct qualifying foreign housing expenses. The base housing amount is 16% of the FEIE limit — only expenses above that qualify.
Housing Cap
The housing exclusion is capped at 30% of the FEIE limit (higher in some high-cost cities designated by the IRS). Self-employed individuals take the housing deduction instead.