Foreign Housing Exclusion And Deduction


DEFINITION of 'Foreign Housing Exclusion And Deduction'

An allowance for taxpayers who live and work in a foreign country to exclude any amount that their employer allocates to them to cover housing costs. The exclusion applies regardless of whether the expenses are paid directly to the taxpayer or on his or her behalf. This exclusion applies for expenses related to housing, rent, repairs, utilities and several other types of expenses.

BREAKING DOWN 'Foreign Housing Exclusion And Deduction'

In order to qualify for this exclusion, taxpayers must meet the same time criteria as for the bona fide resident or physical-presence tests. Qualifying expenses may also include payments intended to equalize taxes and education expenses for the taxpayer's children or dependents. Costs relating to the purchase of property or the employ of domestic servants do not qualify for the exclusion.

  1. Physical-Presence Test

    Similar to the bona fide foreign residence test, the physical-presence ...
  2. Bona Fide Foreign Resident

    Any resident of a foreign country that meets the IRS criteria ...
  3. Deduction

    Any item or expenditure subtracted from gross income to reduce ...
  4. Principal Residence

    The primary location that a person inhabits. It doesn't matter ...
  5. Federal Income Tax

    A tax levied by the United States Internal Revenue Service (IRS) ...
  6. Internal Revenue Service - IRS

    A United States government agency that is responsible for the ...
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