US Foreign Earned Income Exclusion Calculator (Form 2555)

For tax year 2026 the maximum foreign earned income exclusion is $132,900 per qualifying person, up from $130,000 for 2025. A married couple where both spouses qualify independently can exclude up to $265,800 between them, because the exclusion is per person rather than per return. The figure is set annually by the IRS in its inflation-adjustment revenue procedure — Rev. Proc. 2025-32 for 2026.

Up to $132,900 of foreign earned income for 2026 through the exclusion itself, plus a further foreign housing exclusion if your qualifying housing costs exceed the base amount of $21,264. So an American in a high-cost city with substantial rent can shelter meaningfully more than $132,900. Income above what you exclude is still taxable, though foreign tax credits often reduce or eliminate the tax on it.

You must have foreign earned income, your tax home must be in a foreign country, and you must meet one of three conditions: be a US citizen who is a bona fide resident of a foreign country for an uninterrupted period including an entire tax year; be physically present in a foreign country for at least 330 full days during any 12 consecutive months; or be a US resident alien who is a national of a treaty country and a bona fide resident of a foreign country for a full tax year.

The physical presence test is purely mechanical — 330 full days in a foreign country across any 12 consecutive months, with no regard for your intentions. The bona fide residence test is about the nature of your stay: you must reside in a foreign country for an uninterrupted period covering an entire tax year, and it permits brief trips back to the US provided you clearly intend to return without unreasonable delay. Physical presence suits people who travel; bona fide residence suits people who have genuinely settled.

A full day is a complete 24-hour period, midnight to midnight, spent in a foreign country. Days you spend travelling over international waters, or partial days of arrival and departure, generally do not count. This is why the test allows only 35 days of slack across the 12-month period — most people lose several days to travel alone, so the real margin is narrower than it looks.

No, and this is the most expensive misunderstanding about the FEIE. The exclusion reduces your income tax only. Self-employment tax at 15.3% still applies to your net self-employment earnings on the full amount, before the exclusion. Americans self-employed in the UK usually escape it instead through the US/UK Totalization Agreement, by paying UK National Insurance and obtaining a certificate of coverage — not through the FEIE.

It excludes qualifying housing costs above a base amount, which is 16% of the FEIE limit — $21,264 for 2026. Your excludable housing amount is your qualifying expenses, capped at the location limit (generally $39,870 for 2026, or 30% of the exclusion), minus that $21,264 base. So $30,000 of qualifying rent in a general-limit location gives a housing exclusion of $8,736.

Yes. The IRS publishes location-specific housing limits each year for high-cost cities, and London is among the locations with a limit above the general $39,870 figure for 2026. The exact amount is set out in IRS Notice 2026-25 and reproduced in the Form 2555 instructions — look up your city and enter its figure into the housing limit field above rather than relying on the general default.

Only earned income for services performed abroad qualifies. Excluded from qualifying: investment income, dividends, interest, capital gains, rental income, pension and annuity payments, Social Security benefits, and pay received as a US government employee. Income earned while physically in the United States never qualifies, no matter where your employer is based or where you are paid.

Yes, but never on the same income. If you exclude $132,900 and earn $180,000, you can claim a foreign tax credit only on the foreign tax attributable to the remaining $47,100 — you must reduce your creditable foreign taxes proportionately. For Americans in the UK, where UK rates typically exceed US rates, the foreign tax credit alone often produces a better result than the exclusion, especially because it can generate carryforwards.

Often the foreign tax credit, because UK tax rates are generally higher than US rates, so UK tax alone usually wipes out the US liability while also generating excess credits to carry forward. The FEIE, by contrast, uses up the exclusion and leaves no carryforward. The FEIE tends to win where UK tax is unusually low on the income, or where you want to reduce adjusted gross income for another purpose. Run both before choosing.

The maximum exclusion is reduced in proportion to the days of the tax year that fall inside your qualifying period. If your qualifying period covers 200 days of 2026, your maximum exclusion is $132,900 × 200/365, or about $72,822. The housing base and limit pro-rate the same way. Enter your qualifying days above and the calculator handles the arithmetic.

Generally yes. The exclusion can be claimed on a return filed within a year of the original due date, or later in certain circumstances — including on an amended return, or under the Streamlined Filing Compliance Procedures if you are catching up on unfiled years. The IRS can deny a late election in some situations, so it is not something to rely on casually, but discovering the FEIE years late is not usually fatal.

Form 2350 extends your filing deadline until you can actually meet the bona fide residence or physical presence test. If you moved abroad in, say, August, you cannot meet the 330-day test for that year until well into the next one — so Form 2350 lets you wait and file once with the exclusion properly claimed, rather than filing without it and amending. It is only for people expecting to file Form 2555, and it must be filed by the due date.

No. The exclusion is claimed on a return — it is not an exemption from filing. If your gross income exceeds the filing threshold you must file Form 1040 with Form 2555 attached, even if the exclusion reduces your tax to zero. Failing to file because you assumed the exclusion covered you is one of the most common routes into needing the Streamlined Procedures later.

Not at all — they are entirely separate obligations. The FBAR (FinCEN Form 114) is triggered by having foreign financial accounts with an aggregate value over $10,000 at any point in the year, regardless of your income or how much of it you exclude. Form 8938 under FATCA has its own thresholds. Excluding all of your income does not remove either requirement.

Yes, if both qualify in their own right. The exclusion is per qualifying person, not per return, so a married couple filing jointly where both meet a qualifying test and both have foreign earned income can exclude up to $265,800 for 2026 between them. But each spouse's exclusion is limited to their own foreign earned income — you cannot use your spouse's unused allowance against your income.

It applies the exact 2026 figures — the $132,900 maximum exclusion, the $21,264 housing base and the $39,870 general housing limit — and follows the Form 2555 ordering, figuring the housing exclusion first and then capping the FEIE at income remaining after it. It does not model your resulting US tax, the foreign tax credit interaction, self-employment tax, or the stacking rule that taxes your non-excluded income at the rate that would have applied without the exclusion.

If you are choosing between the exclusion and the foreign tax credit, moved abroad mid-year, are self-employed, or hold UK pensions or ISAs alongside your salary, the interactions get expensive to guess at — and the FEIE-versus-credit decision compounds over years through carryforwards. Book a free 20-minute call with a TaxStone Enrolled Agent to model both routes on your actual numbers.