Understanding the Foreign Earned Income Exclusion on Form 1040
Many U.S. expatriates wonder how to apply the Foreign Earned Income Exclusion (FEIE) when filing their taxes. This guide provides a clear explanation.
What is the FEIE?
The FEIE allows U.S. citizens working abroad to exclude up to $120,000 (for 2023) of their foreign earnings from U.S. income tax, significantly reducing their tax liability.
Eligibility Criteria for FEIE
To qualify for the FEIE, taxpayers must meet requirements such as the Physical Presence Test or the Bona Fide Residence Test.
Where to Find FEIE on Form 1040
The exclusion is reported on Form 2555 or 2555-EZ, which is then used to calculate the adjusted gross income on your Form 1040.
Steps to Claim FEIE
- Complete Form 2555 or 2555-EZ.
- Report your foreign earnings and exclusion on Form 1040.
Additional Resources
Consult a tax professional or visit Shore Tax and Insurance official page for more detailed information on FEIE.