One of the most powerful tools for U.S. citizens living and working abroad is the Foreign Earned Income Exclusion (FEIE). If you’re a remote worker or digital nomad based in most foreign countries, this exclusion can help reduce your U.S. tax burden significantly.
What Is the FEIE?
The FEIE allows qualifying U.S. expats to exclude a certain amount of foreign-earned income from U.S. taxation. For 2024, that amount is up to $126,500 per individual.
Who Qualifies?
To use the FEIE, you must:
- Have foreign-earned income
- Maintain a tax home in a foreign country
- Pass either the Physical Presence Test (330 days out of 12 months abroad) or the Bona Fide Residence Test
What Counts as Earned Income?
This applies to wages, salaries, and self-employment income—but not passive income like dividends or capital gains.
What About State Taxes?
Some U.S. states still require tax filings even if you live abroad. It depends on where you last resided and whether you’ve severed “domicile” ties.
Plan It Right
Using the FEIE can be a game-changer, but it requires strategic planning. If you’re earning income in a Foreign country, let’s explore together whether you qualify and how to file properly.
Failure to file timely may trigger SDO or SFO, see our website if you’ve not reported foreign income in the past on your US return.