If you’re a US expat earning income abroad, it’s important to understand the Foreign Earned Income Exclusion (FEIE) rules and eligibility criteria. The FEIE allows eligible expats to exclude a portion of their foreign earned income from US federal taxation. However, failing to meet the eligibility criteria or violating the FEIE rules can result in hefty penalties and additional taxes owed. In this article, we’ll provide a comprehensive overview of FEIE rules and eligibility criteria for US expats, including information on how to apply, common mistakes to avoid, and additional considerations to keep in mind.

HOW MUCH INCOME CAN A US EXPAT EXCLUDE?
As of the tax year 2022, a US expat can exclude up to $112,000 of their foreign earned income from US federal income tax under the Foreign Earned Income Exclusion (FEIE).

WHO QUALIFIES FOR THE FOREIGN EARNED INCOME EXCLUSION?
To qualify for FEIE, US expats must meet certain eligibility criteria. The two main tests used to determine eligibility are the physical presence test and the bona fide residence test.

WHAT IS THE PHYSICAL PRESENCE TEST FOR FOREIGN-EARNED INCOME EXCLUSION?
The Physical Presence Test requires the taxpayer to be physically present in a foreign country or countries for at least 330 full days during a 12-month period. The 330 days do not need to be consecutive and can be spread out over the 12-month period.

If the taxpayer meets the Physical Presence Test, they may be able to exclude up to $112,000 of foreign earned income for the tax year 2022 from their US federal income tax return.

HOW MANY DAYS CAN AN EXPAT BE IN THE US?
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