What is the maximum foreign housing exclusion?

The limitation on housing expenses is generally 30% of the maximum foreign earned income exclusion. For 2020, the housing amount limitation is $32,280. However, the limit will vary depending upon the location of your foreign tax home and the number of qualifying days in the tax year.

How is foreign housing exclusion calculator?

The computation of the base housing amount (line 32 of Form 2555) is tied to the maximum foreign earned income exclusion. The amount is 16% of the maximum exclusion amount divided by 365 (366 if a leap year), then multiplied by the number of days in your qualifying period that fall within your tax year.

How much is the foreign income exclusion?

However, you may qualify to exclude your foreign earnings from income up to an amount that is adjusted annually for inflation ($103,900 for 2018, $105,900 for 2019, $107,600 for 2020, and $108,700 for 2021). In addition, you can exclude or deduct certain foreign housing amounts.

Is there a limit to the foreign housing deduction?

Your foreign housing deduction cannot be more than your foreign earned income less the total of your (1) foreign earned income exclusion, plus (2) your housing exclusion. Although the foreign housing exclusion and/or the deduction will reduce your regular income tax, they will not reduce your self-employment tax.

What is the foreign earned income exclusion for housing?

The base housing amount is 16% of the eligible amount of foreign earned income exclusion. For example, if you are able to exclude the maximum for 2014 or $99,200, the base amount is $15,872 or $43.48 per day. This amount is the portion that cannot be excluded- think of it as the money you would typically have spent on housing in the United States.

How is the foreign housing amount calculated on IRS Form 2555?

Your foreign housing amount is the total of your foreign housing expenses for the year minus the base housing amount. The computation of the base housing amount (line 32 of Form 2555) is tied to the maximum foreign earned income exclusion.

What do you need to know about foreign housing expenses?

Housing expenses include reasonable expenses actually paid or incurred for housing in a foreign country for you and (if they lived with you) for your spouse and dependents. Consider only housing expenses for the part of the year that you qualify for the foreign earned income exclusion.