Claiming foreign housing on your US expatriate return
A deduction/exclusion that is massively under claimed amongst US expatriates is the Foreign Housing Exclusion/deduction. The exclusion/deduction works in conjunction with the Foreign Earned Income Exclusion (FEIE) and is an allowance that includes some of your housing expenses from your gross income on your US tax return.
The allowance is deductible at different thresholds depending on where you live and how many days you have lived outside of the US.
Who qualifies for the US foreign housing deduction/deduction?
In order to qualify for the US foreign housing exclusion/deduction you must pass either the Bona Fide Residence Test or the physical presence test. Your housing expenses must also exceed the base amount expressed by the IRS for your location.
A deduction/exclusion that is massively under claimed amongst US expatriates is the Foreign Housing Exclusion/deduction. The exclusion/deduction works in conjunction with the Foreign Earned Income Exclusion (FEIE) and is an allowance that includes some of your housing expenses from your gross income on your US tax return.
The allowance is deductible at different thresholds depending on where you live and how many days you have lived outside of the US.
Who qualifies for the US foreign housing deduction/deduction?
In order to qualify for the US foreign housing exclusion/deduction you must pass either the Bona Fide Residence Test or the physical presence test. Your housing expenses must also exceed the base amount expressed by the IRS for your location.
What does foreign housing deduction/exclusion include?
Housing exclusion is only claimable on income from an employer. This includes amounts that are paid to you or paid on behalf of your employer that are taxable foreign earned income to your for the tax year. Housing deduction applies only to amounts paid for with self-employed earnings.
Housing expenses are considered any reasonable expenses actually paid or incurred for housing in a foreign country for you and (if they live with you) your spouse/ dependents. Lavish or extravagant housing expenses, the cost of buying the property, furniture or accessories and home improvements are not included in the deduction.
Your housing amount is calculated by taking your total housing expenses per year from your base housing amount.