Can Form 8854 Exclusion 2023-2024

Hi buddy, I'm David from Greenback Expat Tax Services. Our question this week is about using the foreign housing exclusion to lower your US taxes. The foreign housing exclusion is tied to the foreign earned income exclusion, so it has the same requirements. The foreign housing exclusion is 30% of the foreign earned income exclusion amount, which for this tax year is $29,280. This amount is prorated based on the number of days you spend in a foreign country. For example, if you are in the UK for 340 days out of a 365-day period, you can exclude approximately 93% of your foreign housing expenses using this formula. The specific amount can vary depending on the city you are living in, as the IRS recognizes that different cities have different housing costs. In certain higher cost cities, the exclusion amount has been increased. For instance, if you live in Montreal, you can exclude $60,600; in Melbourne, you can exclude $44,600; in Hong Kong, you can exclude $114,300; in Paris, you can exclude $82,500; in Berlin, the number is $49,400; and in London, you can exclude $88,200. Now, let's talk about what qualifies as foreign housing expenses that are excludable. Housing expenses such as rent, repairs, and utilities (excluding telephone costs) are eligible. Personal property insurance and leasing fees can also be included. Additionally, expenses for furniture renting or parking can qualify for the exclusion. However, it's important to note that if your US-based employer reimburses you for living expenses, that reimbursement is considered taxable income. Despite this, you can still utilize the foreign housing exclusion to reduce your income on your US tax return. That's all for this week. If you have any questions, please let us know. Thank you.