The Foreign Earned Income Exclusion: A Plain-Language Guide

The Foreign Earned Income Exclusion (FEIE) lets US citizens and resident aliens living abroad exclude a portion of their foreign wages from US income tax — the 2024 exclusion amount is $126,500 per person. To qualify, you must have a tax home in a foreign country and meet either the Bona Fide Residence Test or the Physical Presence Test. You claim the exclusion on Form 2555, which is filed with your regular tax return. The FEIE only covers earned income — wages, salaries, and self-employment income — not passive income like dividends, interest, or rental income. If you're also self-employed abroad, the exclusion reduces your income tax but not your self-employment tax.