Chapter 36
How To Treat Foreign Earned Income
36.1 Claiming the Foreign Earned Income Exclusion
36.2 What Is Foreign Earned Income?
36.3 Qualifying for the Foreign Earned Income Exclusion
36.4 How To Treat Housing Costs
36.5 Meeting the Foreign Residence or Physical Presence Test
36.7 Exclusion Not Established When Your Return Is Due
36.8 Tax-Free Meals and Lodging for Workers in Camps
36.9 U. S. Virgin Islands, Samoa, Guam, and Northern Marianas
36.11 Tax Treaties With Foreign Countries
There is a tax incentive for working abroad—in 2013 up to $97,600 of income earned abroad may escape U.S. income taxes and you may be entitled to an exclusion or deduction for certain housing costs. In measuring the economic value of this tax savings, consider the extra cost of living abroad. In some areas, the high cost of living and currency exchange rates will erode your tax savings.
The exclusion does not apply to investment income or to any other earned income that does not meet the exclusion tests.
To claim a foreign income exclusion you must satisfy a foreign residence or physical presence test (36.5).
Employees of the U.S. government may not claim an exclusion based on the government pay earned abroad.
36.1 Claiming the Foreign Earned Income Exclusion
If your tax home is in a foreign country and you meet either the foreign residence test or physical presence ...
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