The Foreign Housing Exclusion (FHE) is a tax relief program for US citizens living abroad, designed to mitigate the financial challenges associated with housing expenses. It allows eligible individuals to deduct reasonable housing costs from their taxable income under the Foreign Earned Income Exclusion (FEIE). Claiming the FHE necessitates first qualifying for the FEIE by passing either the Bona Fide Residence or Physical Presence Test. Qualifying expenses include rent, utilities, residential parking fees, and more, thus providing crucial financial support for expatriates navigating foreign living costs.
The Foreign Housing Exclusion provides tax relief for US citizens residing abroad, alleviating the financial strain of housing costs associated with living in foreign countries.
The FHE works as a supplement to the Foreign Earned Income Exclusion, specifically addressing the high cost of housing for expatriates.
Qualifying for the Foreign Housing Exclusion requires passing the Bona Fide Residence Test or the Physical Presence Test under the Foreign Earned Income Exclusion criteria.
Eligible housing expenses for the FHE include rent, utilities, insurance, repairs, and more, provided they are deemed reasonable and directly related to foreign living.
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