International Tax

What is a foreign earned income exclusion?

Exclusion from gross income of foreign earned income of an individual provided for any taxable year it does not exceed the amount of foreign earned income computed on a daily basis at the annual rate of $70,000. The Taxpayer Relief Act of 1997 has increased the exclusion to $72,000 for calendar year 1998 with an annual increase thereafter of $2,000 until calendar year 2002 when the exclusion will become $80,000 for that year and subsequent years. Further increases are provided for tax years beginning in 2008 based on the cost-of-living adjustment.

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