Internal Revenue Service

Foreign Earned Income Exclusion

Who Qualifies for the Foreign Earned Income Exclusion?

Note: If your only earned income abroad is pay you received from the U.S. Government as its employee, you do not qualify for this exclusion.

You qualify for the tax benefits available to taxpayers who have foreign earned income if both 1 and 2 apply:

1. You meet the tax home test
2. You meet either the bona fide residence test or the physical presence test.

Tax Home test:

To meet this test, your tax home must be in a foreign country throughout your period of bona fide residence or physical presence. Your tax home is your regular place of business, employment, or post of duty, regardless of where you maintain your family residence. You are not considered to have a tax home in a foreign country for any period during which your abode is in the United States. The issue of tax home can be complex, and we recommend that you read about it on page 12 of Publication 54 (Tax Guide for U.S. Citizens and Resident Aliens Abroad).

Bona fide Residence test:

To meet this test, you must be one of the following:
A U.S. citizen who is a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire calendar year, or
A U.S. resident alien who is a citizen or national of a country with which the U.S. has an income tax treaty in effect, and who is a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire calendar year.

Physical Presence test:

To meet this test you must be a U.S. citizen or resident alien who is physically present in a foreign country or countries for at least 330 full days during any period of 12 months in a row.

If you qualify to take this exclusion, you must attach a completed Form 2555 or 2555-EZ to your Form 1040.

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