What is the Foreign Housing Deduction?

The IRS allows qualified US expats to deduct acceptable housing expenses from their total income. The limit changes yearly and is based on a percentage of the Foreign Earned Income Exclusion. As the FEIE is increased annually for inflation, the Foreign Housing Allowance also increases annually. This is applied to a US expat tax return by attaching Form 2555.

For more information, check out our article to learn how the Foreign Housing Allowance works