US Expat Foreign Income Tax (FEIE)

The Expat Foreign Earned Income Exclusion (FEIE) Tax Shield

The United States is one of the few nations globally that enforces **citizenship-based taxation**. This means that regardless of where you live, work, or earn income globally, you must file annual tax returns with the IRS.

To shield expats from double taxation, the US tax code provides a highly lucrative exclusion program: the **Foreign Earned Income Exclusion (FEIE, Form 2555)**.

Winning the 330-Day Physical Presence Test (PPT)

To qualify for the FEIE tax shield (which excludes up to **$126,500** of foreign earned salary for the 2026 tax year), expats must meet the strict requirements of the **Physical Presence Test (PPT)**:

• The 330-Day Rule: You must be physically present in a foreign country or countries for at least **330 full days** within a consecutive 12-month period.
• The Full Day Standard: A "full day" is a 24-hour block starting at midnight. Time spent traveling over international waters or flying between the US and foreign destinations does not count toward your 330-day requirement!

FEIE vs. FTC: Choosing the Optimal Double Tax Shield

If you live in a high-tax jurisdiction (such as the UK, Germany, or Japan), the **Foreign Tax Credit (FTC, Form 1116)** may be a superior option to the FEIE.

The FTC provides a dollar-for-dollar tax credit against your US liability for the income taxes you pay to your host nation. Because foreign income tax rates in these countries often exceed US brackets, the FTC can completely wipe out your US tax obligation, while allowing you to claim standard child tax credits—an option that is restricted under the FEIE.