Foreign Earned Income & Housing Exclusions for 2008

Exclusion amount.
For 2008, the IRS has announced that "the maximum foreign earned income exclusion has increased from $85,700 to $87,600.

Housing expenses-base amount.
For 2008, the IRS has announced that "the base housing amount has increased from $37.57 per day to $38.30 per day.

This represents an increase from $13,712 for an an entire calender year to $14,016 for an entire calendar year.

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Does one have to take the Foreign Housing exclusion. I have lower taxes if I do not take it as it negates more of my foreign tax credits than any taxes it saves from excluding income

olddave48

According to the IRS, "Since the foreign earned income exclusion is voluntary, qualifying individuals must choose to claim the exclusion."

[Source: http://www.irs.gov/businesses/articl...82017,00.html]

Thus, you do not have to claim these exclusions if it helps you to save you taxes on your personal tax return.

But, on the other hand, if you choose to claim the "foreign earned income exclusion and the foreign housing cost amount exclusion" then you must determine these amounts using Form 2555 (pdf), which must be attached to Form 1040 (pdf).

But, also, it is worth noting that once the choice is made to exclude foreign earned income, that choice remains in effect for the year the election is made and all later years, unless revoked.

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