foreign income

The United States taxes citizens and residents on their worldwide income. Citizens and residents living and working outside the U.S. may be entitled to a foreign earned income exclusion that reduces taxable income. For 2023, the maximum exclusion is $120,000 per taxpayer (future years indexed for inflation). Taxpayers filing a joint return are entitled to up to two exclusions if both have earned income. In addition, the taxpayer may exclude housing expenses in excess of 16% of this maximum ($52.60 per day in 2023) but with limits.The exclusion is available only for wages or self-employment income earned for services performed outside the U.S. The exclusion is claimed on IRS Form 2555.

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