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We claim the foreign earned income exclusion for Americans who live and work abroad, after testing the travel dates behind it.
A US citizen or resident with a foreign tax home who meets the 330-day or residence test can exclude foreign wages or self-employment profit up to the 2026 cap.
Filers can use the exclusion against federal income tax only; self-employment tax and tax on investment income are still due.
Filers who claim it give up the earned income credit and the additional child tax credit for that year.
Send your travel calendar and income records, and a CPA confirms which test you meet and how much the exclusion covers.
The foreign earned income exclusion means a US citizen or resident with a foreign tax home can leave qualifying foreign earned income off taxable income, up to a yearly cap.
The maximum foreign earned income exclusion for 2026 is $132,900 per person. Married spouses who both qualify each claim their own exclusion, so a couple can exclude up to $265,800 of their own earnings.
When a filer qualifies for only part of a first or last year abroad, we prorate the foreign earned income exclusion limit by qualifying days.
A filer needs a foreign tax home and one of two tests. The IRS weighs where the work is and where family and economic ties are: an abode in the US disqualifies, though a US house alone does not.
We check the travel record, choose the qualifying test and claim the exclusion on the return.
| Physical presence test | Bona fide residence test | |
|---|---|---|
| Who can use it | Any US citizen or resident alien | US citizens, and resident aliens from treaty countries |
| Time abroad | 330 full days in any 12 consecutive months | An uninterrupted period that includes a full tax year |
| Trips to the US | Days in the US or over international waters do not count | Brief trips are allowed with a clear intent to return |
| Common trap | A full day is midnight to midnight | Claiming nonresident status to avoid the foreign country's income tax rules it out |
A 9-month assignment covers 273 days, 57 short of the test unless more days abroad fall in the same 12 months. Starting abroad on March 1, 2026 leaves 306 qualifying days in 2026 and a limit of $111,418.
The 330-day test and the 2026 limit, worked
Physical presence test: 330 full days abroad in any 12 consecutive months
| A 9-month assignment alone | Fails |
|---|---|
| 273 full days abroad | 330 needed |
| Days still needed in the same 12 months | 57 |
| Abroad from March 1, 2026 | Passes |
| 338 full days abroad by Feb 28, 2027 | 330 needed |
| Qualifying days that fall in 2026 | 306 |
| Prorated 2026 limit | One person |
| 2026 maximum exclusion | $132,900 |
| Qualifying days in 2026 | 306 of 365 |
| $132,900 x 306 / 365, rounded | $111,418 |
Illustration. The 338 days assume 27 days in the US during the 12 months. Sources: IRS physical presence test and figuring the exclusion pages; Rev. Proc. 2025-32.
Wages, salaries, bonuses, professional fees and employer-provided housing or meals for work performed abroad. Pay deposited into a US bank still counts when the work happened in another country.
Pensions and Social Security, pay as a US government employee, and interest, dividends or other investment income.
No. The exclusion cannot cover gains on shares or property.
For a filer who excludes $100,000, the IRS taxes the remaining income at the rates that would apply if that $100,000 were included.
No foreign tax credit is allowed on taxes on excluded income, so we compare both routes before choosing the exclusion.
Self-employed expats can still owe US self-employment tax despite the exclusion, unless a totalization agreement places the income under the other country's social security system.
The foreign earned income exclusion is chosen on Form 2555 with a timely or amended return, or a late return within 1 year of the original due date.
A later return can claim it if no tax is owed after the exclusion, or if it reaches the IRS before the failure to choose is discovered.
A first-year filer who has not yet met either test can request more time on Form 2350, so the return is filed once the test is met.
A filer can revoke the choice by statement, but choosing it again within 5 tax years needs IRS approval.
We rebuild the travel calendar to the day and pick the test the record supports, including the best 12-month window.
We compare the exclusion with the foreign tax credit for the year, and our expat tax services team files the full return.
We prepare Form 2555 and claim the foreign housing exclusion or deduction where housing costs qualify.
We file the state return and any FBAR or Form 8938 the same accounts require.
We price the foreign earned income exclusion as a fixed item on the return and quote the full fee before work starts, based on:
The lightest file is one Form 2555 on one federal return. These are the factors, not a quote.
Each piece is priced within our individual tax preparation.
Send the travel dates, foreign pay records and last year's return, and a CPA confirms the foreign earned income exclusion 2026 amount before anything is filed.
