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How is the foreign housing exclusion calculated under the foreign earned income exclusion?

New York, NY |
Filed under: Tax law

Suppose an American qualifies for the foreign earned income exclusion. He earned $125,000 in 2013 and received a 2013 $50,000 housing stipend, for a total of $175,000 in remuneration.
As I understand, I can exclude up to $97,600 under the foreign earned income exclusion, and may also receive the foreign housing exclusion. How is the housing exclusion calculated?
I live in London. According to http://www.irs.gov/instructions/i2555/ch02.html#d0e542, up to $88,200 can be excluded for London. Does this mean I can exclude $97,600 plus the $50,000 housing stipend (for a total of $147,600) or does it mean I can exclude $97,600 plus $88,200 for housing (for a total of $185,800)?

Attorney Answers 1

Posted

Dear asker,
how you can calculate this amount is far too complicated to answer on this forum. There are likely other incidental income and credits that will affect your overall filing profile. You should hire an accountant with international tax experience to help you in this matter. If you earned $175,000 in income, you should be able to afford it.

This does not constitute legal advice or the engagement of my services as an attorney.

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