What Is the Foreign Earned Income Exclusion?

The Foreign Earned Income Exclusion (FEIE) lets U.S. citizens and resident aliens living abroad exclude a portion of their foreign wages from U.S. income tax — up to $126,500 for 2024. To qualify, you must have foreign earned income and meet either the "bona fide residence test" or the "physical presence test" (330 days outside the U.S. in a 12-month period). You claim it on Form 2555. You can pair it with the Foreign Tax Credit but can't use both for the same income. Even if all your income is excluded, you may still need to file a U.S. return.