Which housing costs qualify for the foreign housing exclusion?
The qualifying pot is what you reasonably spend on housing for yourself and your household in the place your tax home is: rent, utilities other than the telephone, property insurance, occupancy taxes, non-refundable fees paid to secure a leasehold, furniture rental and residential parking. Outside it is anything capital in nature, meaning the purchase price of a home, improvements to it, and furniture bought outright, along with anything already relieved elsewhere in the return such as deductible interest and property taxes. Domestic staff wages and television subscriptions are outside as well. Costs that look like housing on a bank statement are therefore not automatically housing costs here, and a bundled payment usually has to be broken down.
Can I claim the housing exclusion without the earned income exclusion?
No. The housing exclusion is computed by reference to the earned income exclusion and rests on the same foundations: a tax home in a foreign country and one of the two qualifying tests. Only housing costs above a base amount count, and that base is derived from the earned income figure, so the two move together. They also draw on the same limited pool of earnings, so claiming a housing amount affects what the earned income election can remove, and neither can exceed the earnings actually there. In practice they are prepared as one computation rather than two, and a filer who fails the tax home requirement loses both at once.
Does living in an expensive city let me exclude more?
Up to a point. The mechanism recognises that housing costs vary by place, so the ceiling on the housing amount is set by locality, with higher limits published for locations where housing is dear. What it does not do is follow your lease upwards without limit: spend above the ceiling for your location and the excess is simply not excluded. The base amount at the bottom works the same way in reverse, since costs below it do not count at all. The excludable figure is therefore the part of your qualifying costs sitting between the base and the ceiling for where you actually live, which is why the same rent produces different answers in different cities.
What if I am self-employed abroad rather than employed?
The relief still exists but changes shape. An exclusion operates on amounts provided by an employer, so a self-employed filer claims the housing amount as a deduction against income instead. The arithmetic of the base amount and the locality ceiling is the same, but the placement on the return differs, and so does the interaction with everything else: a deduction reduces income rather than removing it from the base, and it is limited by the earnings left after the earned income election. Filers with both a salary and self-employment abroad can end up with part of the housing amount as an exclusion and part as a deduction, which has to be apportioned rather than chosen.
Can my spouse and I both claim a housing amount?
If you share one household there is one set of housing costs and one housing amount, however the rent is paid or whose name is on the lease. Claiming it twice out of the same expenditure is the error to avoid. Where spouses keep separate households in different places, because each has a tax home of their own, each can compute a housing amount on that household costs and against that location ceiling. Living apart for part of the year produces a mixed answer that has to be worked through by period. Which of you claims a shared amount, and how a joint return presents it, is a computation question rather than a choice.
Does an employer housing allowance change how this works?
An allowance, or rent the employer pays direct to a landlord, is compensation first. It goes into income at its value, and only then can the housing amount be excluded out of it, so the allowance does not bypass the return but passes through it. This matters when the allowance exceeds the qualifying costs that fall above the base and below the ceiling, because the excess stays taxable. It matters again when the employer reports the benefit differently from the way it was actually provided, for instance treating a direct rent payment as untaxed. Reconciling the employer statement with the lease and the utility bills is usually where the work starts.
Can I claim the child tax credit if I live abroad?
Partly, and the split matters. The non-refundable part can reduce US tax if the child meets the identification requirement in time. The refundable part is calculated on earned income, so excluding your salary with the foreign earned income exclusion removes the very figure it is built on — which is one of the clearest cases where the exclusion costs more than the credit route. Modelling both is the only way to know. See exclusion against credit.
How do I file US taxes from abroad?
The same forms as anyone else, electronically where your circumstances allow it and on paper where a form or an election requires ink. Three differences matter. An automatic extension applies where your main home is outside the United States. The account report goes to FinCEN separately from the return, on its own schedule. And interest on any balance runs from the ordinary due date regardless of extensions, so an extension buys filing time, not payment time. See a US return from abroad.
