International Tax

What is the foreign earned income exclusion?

The earned income exclusion is found in section 911 of the Internal Revenue Code (IRC). It permits a U.S. citizen or resident alien to exclude from annual gross income certain foreign earned income and foreign housing allowances. The exclusion is dependent, in part, on where the individual resides and the amount of time the individual spent abroad. It is subject to limitation and is complemented by the IRC’s foreign tax credit provisions, which permit qualified individuals to offset qualifying foreign income tax credits against U.S. tax liability that results from foreign source income.

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