Reducing U.S. Taxes While Living Abroad
By: Lynn K. Ching If you are a U.S. citizen or a resident alien of the United States and you live abroad, you are taxed on your worldwide income. However, you may be able to reduce your income in one or several ways, including but not limited to, the Foreign Earned Income Exclusion; and the Foreign Housing Exclusion or Foreign Housing Deduction. Foreign Earned Income Exclusion (“FEIE”) If you qualify for the FEIE (see below), you may exclude your foreign earnings from US income up to an amount that is adjusted annually for inflation ($107,600 for 2020, and $108,700 for 2021). In addition, you may also qualify to exclude or deduct certain foreign housing amounts. Foreign Housing Exclusion or Foreign Housing Deduction (not both) Employees: You may be able to…