Foreign Housing Exclusion and Deduction

If you are an individual who resides and is employed outside of the United States and its territories then you may be eligible for the foreign housing exclusion and deduction program. The foreign housing exclusion and deduction program will provide individuals with the option exclude amounts that are paid by your employer for housing. This means that the foreign housing exclusion and deduction program will allow you to include any amount that is paid directly to you or on your behalf for things such as housing costs, rent payments, education for any children you may have, or tax equalization payments, which are also referred to as gross up payments. Individuals who are interested in obtaining these types of benefits should act as soon as possible since the individual will only have a particular amount of time to meet the requirements. The time requirements are the same as those of the Bona Fide or Physical Presence Tests.

Some of the expenses that will qualify for the foreign housing exclusion and deduction program are things like: rent, rental payments for housing that is provided by the individuals employer, repair costs, necessary utilities such as water or electric but not utilities like telephone services, property insurance costs, homeowners insurance, renters insurance, taxes for occupancy, security deposits, lease fees, rental costs of furniture, and parking fees. There are numerous other things that may be eligible for these programs as well. These are just a few of the various things that are covered. The programs may allow you to include tax equalization payments in which the individual's employer pays or education costs that are paid for your dependent children. Non qualifying expenses range from things like unnecessary expenses, extravagant expenses, mortgages, television which provides a monthly bill, home upgrades or remodeling, domestic services such as maid services, purchased furniture, and property improvements.

Individuals can claim the income exclusion as well as the housing exclusion. The individual can claim just one of these benefits or both of the benefits. The only exception to this is that the individual can not provide a claim for exclusion on the same income more than one time. In most cases, you are urged to include any taxable foreign income that is remaining upon taking the highest level of allowable income exclusions. In order to calculate the exclusions, the individual will add up the total of all of the housing expenses and other costs. The individual will then subtract any expenses that have already been excluded under this program. Then the individual will subtract any housing allowances that are provided to the individual by the United States Government.

From the remaining amount, the individual will subtract a standard amount of thirteen thousand one hundred eighty four dollars each year. For housing expenses, the exclusion amount is a maximum of eleven thousand five hundred thirty six dollars. These two amounts together total out to be around twenty four thousand seven hundred twenty dollars for annual housing allowances.