The United States taxes citizens and residents on their worldwide income. Citizens and residents living and working outside the U.S. may be entitled to a foreign earned income exclusion that reduces taxable income. For 2017, the maximum exclusion is $102,100 per taxpayer, $104,100 for 2018 (future years indexed for inflation). In addition, the taxpayer may exclude housing expenses in excess of 16% of this maximum ($44.19 per day in 2015) but with limits.
The exclusion is available only for wages or self-employment income earned for services performed outside the U.S. The exclusion is claimed on IRS Form 2555.
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