CHECK The Foreign Earned Income Exclusion (FEIE) and Foreign Housing Exclusions help to balance some of that income. For 2015 the FEIE is $100,800 and the housing exclusion is based on where you live. The limits are different for each region;

  • Dubai limit is $57,174 subject to a threshold amount of $16,128
  • Abu Dhabi limit is $49,687 subject to a threshold amount of $16,128

 

The FEIE and housing exclusions are prorated based on the number of days actually outside the US.

 

These exclusions are applied in one of two ways, either by the Physical Presence Test (PPT) or the Bona Fide Residence Test (BRT).

With the Physical Presence Test or PPT we are looking for 330 days in a 12 month period outside the US. The 12 months can start any day of the year and may well include portions of two separate calendar years. The 330 days outside the US do not have to be consecutive, so trips to the US for work, vacation or holidays usually don’t make a difference, as long as you spend no more than 35 days in the US. Travel days are considered US days.

The Bona Fide Residence Test (BFR) is met when your tax home (where you live and work) is established prior to January 1 and remains established outside the US through December 31. In other words, for an entire calendar year.