What is the meaning of Foreign Earned Income Exclusion?

Foreign Earned Income Exclusion (FEIE) is a part of US tax law allowing US citizens and resident aliens living and earning income abroad to exclude foreign income, up to a certain amount, from their tax return.  

For example, if you are a US citizen living and working abroad and you earned the equivalent of $80,000, you could deduct $80,000 from your US tax liability. To qualify for FEIE, you must have lived outside of the US for a full year and meet either the Bona Fide Residence Test or the Physical Presence Test. If you meet the necessary qualifications of these tests, you will be able to exclude up to $126,500 of foreign income in 2024.