Can I claim Foreign Housing Exclusion in Qatar?
More than likely. The Foreign Housing Exclusion allows US taxpayers living abroad to exclude certain housing expenses from their taxable income.
Remember, this is in addition to the Foreign Earned Income Exclusion (FEIE), which already allows them to exclude up to US$126,500 (for the tax year 2024) of their foreign-earned income from US taxes.
What is the limit for FHE in Doha?
For US citizenship holders in Doha, the IRS has set a maximum housing expense limit of US$45,888. This figure represents the upper threshold of what the IRS considers reasonable for housing costs in Doha, including rent, utilities, residential parking, and household maintenance.
Can you deduct the full amount of your housing expenses?
Not entirely. The amount you can claim for the FHE is subject to specific calculations that factor in the cost of living in the US. Essentially, the IRS allows you to claim the difference between what it would cost to live in the US and your actual housing expenses in Doha. This means you’re claiming the additional cost incurred by living in Doha as opposed to the US.
Here’s an example:
A teacher in Doha spends US$35,000 on housing expenses eligible for the Foreign Housing Exclusion, the calculation for her exclusion would be straightforward. After spending US$35,000, she subtracts the base housing amount of US$20,240, determined by 16% of the FEIE for 2024.
This subtraction leaves her with US$14,760 (US$35,000 – US$20,240) that she can claim to reduce her taxable income on her US tax return.
How can the FHE benefit me?
This provision is particularly beneficial for those whose income exceeds the FEIE limit. If your income is, for example, US$140,000, or more, the FHE can help reduce the taxable portion of your income further, potentially lowering your US tax liability to zero, provided you qualify for the exclusion.
