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Foreign Earned Income Exclusion, Foreign Housing Exclusion, and Foreign Housing Deduction — Requirements: Taxes for Americans Abroad (2025 IRS Guide)

This guide covers “Foreign Earned Income Exclusion, Foreign Housing Exclusion, and Foreign Housing Deduction — Requirements” within taxes for americans abroad. The following material presents the IRS treatment of this topic, including the qualifications, exceptions, and examples in the source section. Read the rules alongside the facts of your own situation before deciding what to report, deduct, or document.

Adapted from Publication 54 (12/2025), Tax Guide for U.S. Citizens and Resident Aliens Abroad, published by the Internal Revenue Service. This guide retains the source edition’s years, amounts, deadlines, and examples. It is guidance for that edition, not a statement that the same figures apply to every tax year.

Context for these rules

  • Requirements for the foreign earned income exclusion, the foreign housing exclusion, and the foreign housing deduction,

  • How to determine the amount of the foreign earned income exclusion,

  • How to determine the amount of the foreign housing exclusion and the foreign housing deduction,

  • Effect of making valid exclusions and taking the deduction, and

  • Effect of revocation of exclusions.

Publication

  • 514 Foreign Tax Credit for Individuals

  • 516 U.S. Government Civilian Employees Stationed Abroad

  • 519 U.S. Tax Guide for Aliens

  • 570 Tax Guide for Individuals With Income From U.S. Territories

  • 596 Earned Income Credit (EIC)

Form (and Instructions)

  • 1040-X Amended U.S. Individual Income Tax Return

  • 2555 Foreign Earned Income

See chapter 7 for information about getting these publications and forms.

Foreign Earned Income Exclusion, Foreign Housing Exclusion, and Foreign Housing Deduction — Requirements

To claim the foreign earned income exclusion, the foreign housing exclusion, and/or the foreign housing deduction, you must meet the following requirements.

1. Tax home.

You must have a tax home in a foreign country (or countries). Generally, your tax home is your principal place of business, employment, or post of duty, regardless of where you maintain your family home. For more details on the concept of tax home, see IRS.gov/FEIE-TaxHome.

2. Foreign country (or countries).

You must live in or be present in a foreign country (or countries). A foreign country includes any territory under the sovereignty of a government other than that of the United States. However, a foreign country does not include international waters and the airspace above them. For details on the definition of a foreign country, see IRS.gov/FEIE-TaxHome.

3. Foreign earned income.

You must have wages, salaries, self-employment income, etc., received for performing personal services in a foreign country (or countries). For details on the classification of earned income, see IRS.gov/FEIE-FEI.

4. Bona fide residence and physical presence tests.


a. Bona fide residence. You must be a bona fide resident of a foreign country (or countries) for an uninterrupted period that includes an entire tax year. You use the bona fide residence test only if you are either:

  • a U.S. citizen, or

  • a U.S. resident alien who is a citizen or national of a country with which the United States has an income tax treaty in effect.

You do not automatically acquire bona fide resident status merely by living in a foreign country or countries for 1 year. For more details and examples, see IRS.gov/FEIE-BonaFideResidence.
b. Physical presence. Alternatively, U.S. citizens and resident aliens must be physically present in a foreign country (or countries) for 330 full days during a period of 12 consecutive months. The 330 days don’t have to be consecutive. The physical presence test is based only on how long you stay in a foreign country or countries. This test doesn’t depend on the kind of residence you establish, your intentions about returning, or the nature and purpose of your stay abroad. For details and examples, see IRS.gov/FEIE-PhysicalPresence.
c. Exceptions to the bona fide residence and physical presence requirements. The minimum time requirements for bona fide residence and physical presence can be waived if you must leave a foreign country because of war, civil unrest, or similar adverse conditions in that country. For more information, see People who failed to meet eligibility requirements because of adverse conditions in a foreign country, earlier, and also IRS.gov/Individuals/International-Taxpayers/Exceptions-To-The-Bona-Fide-Residence-And-The-Physical-Presence-Tests.

5. Valid election.

You must make, or have in effect, a valid election by attaching Form 2555, Foreign Earned Income, with your income tax return or amended income tax return. For details, see the instructions for Form 2555, available at IRS.gov/Form2555.

Effect of Choosing the Exclusions and Deduction

Once you choose the foreign earned income exclusion election or foreign housing exclusion election, that choice remains in effect for that year and all later years unless you revoke it. This means you must make the same choice in a subsequent year. Otherwise, it will be considered as a revocation of your foreign earned income exclusion election or foreign housing exclusion election for that year.

Foreign tax credit or deduction.

Once you've made a foreign earned income exclusion election or foreign housing exclusion election, you can't take a foreign tax credit or deduction for foreign taxes on income you choose to exclude. See Pub. 514, Foreign Tax Credit for Individuals, available at IRS.gov/Pub514, for more information.

Note:

If you're a high wage earner, it is possible to take the foreign earned income exclusion up to the limitation for the year. Then, you can take a foreign tax credit for any foreign taxes paid on the portion of the wage that wasn't excluded under the foreign earned income exclusion.

Additional child tax credit.

Similarly, if you've made a foreign earned income exclusion election, or foreign housing exclusion election, or taken the foreign housing deduction, you can't take the additional child tax credit in the same year. For more information on this credit, see Schedule 8812 (Form 1040), Credits for Qualifying Children and Other Dependents, available at IRS.gov/Schedule8812.

Earned income credit.

If you elect the foreign earned income exclusion, you don’t qualify for the earned income credit for the year. For more information on this credit, see Pub. 596, Earned Income Credit, available at IRS.gov/Pub596.

Note:

Should you decide to take a foreign tax credit or deduction, the additional child tax credit, or the earned income credit in a subsequent year, your foreign earned income exclusion election or foreign housing exclusion election would be considered revoked for that year. For more details on other deductions and credits, see Deductions and Credits, later.

Effect of Revoking the Exclusions

You can revoke your choice for any year. You may revoke in several different ways. You may revoke by attaching a statement that you are revoking one or more previously made choices to your return or amended return for the first year that you do not wish to claim the exclusion(s). You must specify which choice(s) you are revoking. You must revoke separately a choice to exclude foreign earned income and a choice to exclude foreign housing amounts. Alternatively, if you decide to take the foreign tax credit, additional child tax credit, or earned income credit in a subsequent year, you will be considered to have revoked your prior choice.

Note: You do not need to revoke a prior choice just because you have no foreign earned income or foreign housing costs for the year.

If you revoked a choice and within 5 years again wish to choose the same exclusion, you must apply for IRS approval. You do this by requesting a ruling from the IRS. Requests can be submitted by fax, encrypted email, or mail. See section 8.05(6).04(1)–(3) of Revenue Procedure 2024-1, 2024-01 I.R.B. 42, available at IRS.gov/irb/2024-01_IRB#REV-PROC-2024-1. For fax requests, transmissions of full packages with a cover sheet can be faxed to 844-249-6231. For email requests, the IRS encourages use of secure electronic facsimile method, or encrypted email attachment to lbi.irt.info@irs.gov.

.Mail your request for a ruling, in duplicate, to: .

Associate Chief Counsel (International)
Internal Revenue Service
Attn: CC:PA:LPD:DRU
P.O. Box 7604
Ben Franklin Station
Washington, DC 20044 .

In deciding whether to approve your request to re-elect, the IRS will consider any facts and circumstances that may be relevant. These may include a period of residence in the United States, a move from one foreign country to another foreign country with different tax rates, a substantial change in the tax laws of the foreign country of residence or physical presence, and a change of employer. For more information, go to IRS.gov/Individuals/International-Taxpayers/Revoking-Your-Choice-To-Exclude-Foreign-Earned-Income.

.If a private delivery service is used, the address is:.

Associate Chief Counsel (International)
Internal Revenue Service
Attn: CC:PA:LPD:TSS, Room 5336
1111 Constitution Ave. NW
Washington, DC 20224 .

Using the guidance

Keep the documents that establish the dates, amounts, and circumstances described above. References to other chapters, forms, worksheets, or earlier and later sections refer to the linked IRS publication. Check the full publication and its updates before relying on a rule for a different tax year or a situation not addressed here.

Sources and further reading

The cited U.S. government text is in the public domain. Source accessed October 28, 2026. Fynoptic has organized this material for educational use and is independent of, and not endorsed by, the IRS.

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