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Categories: Specialized Tax Strategies

Foreign Earned Income Exclusion (FEIE)
The Foreign Earned Income Exclusion (FEIE) is a tax provision that allows U.S. citizens and resident aliens who live and work outside the United States to exclude a certain amount of their foreign earned income from U.S. taxation. For the tax year 2023, the exclusion amount is up to $120,000 per qualifying individual, but this figure may be adjusted annually for inflation.

This exclusion applies to income earned from services performed in a foreign country and is subject to specific eligibility criteria, including the requirement to establish a tax home in a foreign country and to meet either the Bona Fide Residence Test or the Physical Presence Test.

For example, if a U.S. citizen works in Germany and earns $130,000 in a year, they could potentially exclude $120,000 of that income from their U.S. taxable income, only subjecting $10,000 to U.S. taxes, provided they meet the necessary criteria for the exclusion.

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  • Foreign Earned Income Exclusion (FEIE)

    Foreign Earned Income Exclusion (FEIE)

    The Foreign Earned Income Exclusion (FEIE) is a provision under the U.S. tax code that allows qualifying U.S. citizens and resident aliens who live and work abroad to exclude a certain amount of their foreign earned income from U.S. taxation.

    To qualify for the exclusion, taxpayers must meet specific requirements, including the bona fide residence test or the physical presence test. The maximum exclusion amount is adjusted annually for inflation; for 2023, it is $120,000.

    For example, if a U.S. citizen works in a foreign country and earns $150,000 in a year, they could exclude $120,000 of that income from U.S. taxes if they meet the eligibility criteria, meaning they would only be taxed on the remaining $30,000.

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