Department of the Treasury

Internal Revenue Service

Publication 54

Cat. No. 14999E

Tax Guide for 

U.S. Citizens 

and Resident 

Aliens Abroad

For use in preparing

2023 Returns

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Future Developments

For the latest information about developments related to 

Pub. 54, such as legislation enacted after it was 

published, go to IRS.gov/Pub54.

What's New

Termination of 1979 Tax Convention with Hungary. 

On July 15, 2022, the U.S. Department of the Treasury 

(Treasury) announced that Hungary was notified on July 

8, 2022, that the United States would terminate the Convention between the Government of the Hungarian People’s Republic for the Avoidance of Double Taxation and 

the Prevention of Fiscal Evasion with Respect to Taxes on 

Income, in force since 1979. In accordance with the treaty’s provisions on termination, termination is effective on 

January 8, 2023. However, with respect to taxes withheld 

at source, the treaty ceases to have effect on January 1, 

2024. In respect of other taxes, the treaty ceases to have 

effect with respect to taxable periods beginning on or after 

January 1, 2024.

Standard deduction amount increased. For 2023, the 

standard deduction amount has been increased for all filers. The amounts are:

• Single or Married filing separately—$13,850;

• Married filing jointly or Qualifying surviving 

spouse—$27,700; and

• Head of household—$20,800.

Due to the increase in the standard deduction, 

you may be required to file a new Form W-4. For 

more information, go to IRS.gov/Payments/TaxWithholding.

Exclusion amount. The maximum foreign earned income exclusion is adjusted annually for inflation. For 

2023, the maximum exclusion has increased to $120,000. 

See Limit on Excludable Amount under Foreign Earned Income Exclusion in chapter 4.

Housing expenses—maximum amount. Generally, the 

maximum amount of housing, housing expenses is limited 

to $36,000 for 2023. For such computation, you need to 

determine your base housing amount (line 32 of Form 

2555) which is $56.60 per day ($19,200 per year) for 

2023, multiplied by the number of days in your qualifying 

period that fall within your tax year. For more details, see 

Housing Amount under Foreign Housing Exclusion and 

Deduction in chapter 4.

Housing expenses—maximum amount continued. 

The amount of qualified housing expenses eligible for the 

housing exclusion and housing deduction may be higher 

for your foreign geographic location. See Limit on housing 

expenses under Foreign Housing Exclusion and Deduction in chapter 4.

Self-employment tax rate. For 2023, the maximum 

amount of net earnings from self-employment that is 

subject to the social security part of the self-employment 

Feb 26, 2024
tax has increased to $160,200. All net earnings are subject to the Medicare part of the tax. For more information, 

see chapter 3.

IRA limitations. You may be able to take an IRA deduction if you were covered by a retirement plan and your 

2023 modified adjusted gross income (MAGI) is less than 

$83,000 ($136,000 if married filing jointly or a qualifying 

surviving spouse). If your spouse was covered by a retirement plan, but you were not, you may be able to take an 

IRA deduction if your MAGI is less than $228,000. See the 

Instructions for Form 1040 for details and exceptions.

Reminders

Denial or revocation of U.S. passport. The IRS is required to notify the State Department of taxpayers certified 

as owing a seriously delinquent tax debt. The State Department is generally prohibited from issuing or renewing 

a passport to a taxpayer with seriously delinquent tax 

debt.

If you currently have a valid passport, the State Department may revoke your passport or limit your ability to 

travel. Additional information on passport certification is 

available at IRS.gov/Passports.

Individual taxpayer identification number (ITIN) renewal. An ITIN for a nonresident alien spouse or dependent used on a prior-year income tax return may require renewal. For more information, go to IRS.gov/ITIN.

Figuring tax on income not excluded. If you claim the 

foreign earned income exclusion, the housing exclusion, 

or both, you must figure the tax on your nonexcluded income using the tax rates that would have applied had you 

not claimed the exclusions. See the Instructions for Form 

1040 and complete the Foreign Earned Income Tax Worksheet to figure the amount of tax to enter on Form 1040 or 

1040-SR, line 16. If you must attach Form 6251, Alternative Minimum Tax—Individuals, to your return, use the Foreign Earned Income Tax Worksheet provided in the 

Instructions for Form 6251.

Moving expenses suspended. The deduction for moving expenses is suspended unless you are a member of 

the U.S. Armed Forces who moves pursuant to a military 

order and incident to a permanent change of station.

Tax home for individuals serving in a combat zone. 

New rules apply for certain individuals serving in a combat 

zone in support of the U.S. Armed Forces. For more information, see Tax Home in chapter 4.

Form 8938. If you had foreign financial assets, you may 

have to file Form 8938 with your return. See Form 8938 in 

chapter 1.

Photographs of missing children. The IRS is a proud 

partner with the National Center for Missing & Exploited 

Children® (NCMEC). Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. You can help bring 

these children home by looking at the photographs and 

calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child.

Introduction

This publication discusses special tax rules for U.S. citizens and resident aliens who work abroad or who have income earned in foreign countries.

If you are a U.S. citizen or resident alien, your worldwide income is generally subject to U.S. income tax, regardless of where you are living. Also, you are subject to 

the same income tax filing requirements that apply to U.S. 

citizens or resident aliens living in the United States. Expatriation tax provisions apply to U.S. citizens who have 

renounced their citizenship and long-term residents who 

have ended their residency. These provisions are discussed in chapter 4 of Pub. 519.

Resident alien. A resident alien is an individual who is 

not a citizen or national of the United States and who 

meets either the green card test or the substantial presence test for the calendar year.

1. Green card test. You are a U.S. resident if you were 

a lawful permanent resident of the United States at 

any time during the calendar year. This is known as 

the green card test because resident aliens hold immigrant visas (also known as green cards).

2. Substantial presence test. You are considered a 

U.S. resident if you meet the substantial presence test 

for the calendar year. To meet this test, you must be 

physically present in the United States on at least:

a. 31 days during the current calendar year; and

b. A total of 183 days during the current year and the 

2 preceding years, counting all the days of physical presence in the current year, but only 1/3 the 

number of days of presence in the first preceding 

year, and only 1/6 the number of days in the second preceding year.

Example. You were physically present in the United 

States for 120 days in each of the years 2021, 2022, and 

2023. To determine if you meet the substantial presence 

test for 2023, count the full 120 days of presence in 2023, 

40 days in 2022 (1/3 of 120), and 20 days in 2021 (1/6 of 

120). Because the total for the 3-year period is 180 days, 

you are not considered a resident under the substantial 

presence test for 2023.

Even if you do not meet either of these tests, you may 

be able to choose to be treated as a U.S. resident for part 

of the year under the first-year choice test, discussed in 

Pub. 519.

For more information on resident and nonresident status, the tests for residence, and the exceptions to them, 

see Pub. 519.

Filing information. Chapter 1 contains general filing information, such as:

• Whether you must file a U.S. tax return,

• When and where to file your return,

• How to report your income if it is paid in foreign currency,

2 Publication 54 (2023)
• How to treat a nonresident alien spouse as a U.S. resident, and

• Whether you must pay estimated tax.

Withholding tax. Chapter 2 discusses the withholding 

of income, social security, and Medicare taxes from the 

pay of U.S. citizens and resident aliens.

Self-employment tax. Chapter 3 discusses who must 

pay self-employment tax.

Foreign earned income exclusion and housing exclusion and deduction. Chapter 4 discusses income tax 

benefits that apply if you meet certain requirements while 

living abroad. You may qualify to treat up to $120,000 of 

your income as not taxable by the United States. You may 

also be able to either deduct part of your housing expenses from your income or treat a limited amount of income 

used for housing expenses as not taxable by the United 

States. These benefits are called the foreign earned income exclusion and the foreign housing deduction and exclusion.

To qualify for either of the exclusions or the deduction, 

you must have a tax home in a foreign country and earn 

income from personal services performed in a foreign 

country. These rules are explained in chapter 4.

If you are going to exclude or deduct your income as 

discussed above, you must file Form 2555.

Deductions and credits. Chapter 5 discusses deductions and credits you may be able to claim on your return. 

These are generally the same as if you were living in the 

United States. However, if you choose to exclude foreign 

earned income or housing amounts, you can’t deduct or 

exclude any item or take a credit for any item that is related to the amounts you exclude. Among the topics discussed in chapter 5 are:

• Contributions to foreign organizations,

• Contributions to individual retirement arrangements 

(IRAs), and

• Foreign taxes.

Tax treaty benefits. Chapter 6 discusses some benefits 

that are common to most tax treaties and explains how to 

get help if you think you are not receiving a treaty benefit 

to which you are entitled. It also explains how to get copies of tax treaties.

How to get tax help. Chapter 7 is an explanation of how 

to get information and assistance from the IRS.

Questions and answers. Frequently asked questions 

and answers to those questions are presented in the back 

of the publication.

Comments and suggestions. We welcome your comments about this publication and suggestions for future 

editions.

You can send us comments through IRS.gov/

FormComments. Or, you can write to the Internal Revenue 

Service, Tax Forms and Publications, 1111 Constitution 

Ave. NW, IR-6526, Washington, DC 20224.

Although we can’t respond individually to each comment received, we do appreciate your feedback and will 

consider your comments and suggestions as we revise 

our tax forms, instructions, and publications. Don’t send 

tax questions, tax returns, or payments to the above address.

Getting answers to your tax questions. If you have 

a tax question not answered by this publication or the How 

To Get Tax Help section at the end of this publication, go 

to the IRS Interactive Tax Assistant page at IRS.gov/

Help/ITA where you can find topics by using the search 

feature or viewing the categories listed.

Getting tax forms, instructions, and publications. 

Go to IRS.gov/Forms to download current and prior-year 

forms, instructions, and publications.

Ordering tax forms, instructions, and publications. 

Go to IRS.gov/OrderForms to order current forms, instructions, and publications; call 800-829-3676 to order 

prior-year forms and instructions. The IRS will process 

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Don’t resubmit requests you’ve already sent us. You can 

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1.

Filing Information

Topics

This chapter discusses:

• Whether you have to file a return,

• When to file your return and pay any tax due,

• How to treat foreign currency,

• How to file electronically,

• Where to file your return,

• When you can treat your nonresident alien spouse as 

a resident, and

• When you may have to make estimated tax payments.

Useful Items

You may want to see:

Publication

Armed Forces' Tax Guide

501 Dependents, Standard Deduction, and Filing 

Information

505 Tax Withholding and Estimated Tax

 3 

 501 

 505 

Publication 54 (2023) Chapter 1 Filing Information 3
U.S. Tax Guide for Aliens

Tax Benefits for Education

Form (and Instructions)

stimated Tax for Individuals

Amended U.S. Individual Income Tax Return

Application for Extension of Time To File U.S. 

Income Tax Return

Foreign Earned Income

Application for Automatic Extension of Time To 

File U.S. Individual Income Tax Return

Change of Address

All of these forms, instructions, and publications can be 

downloaded from IRS.gov. See chapter 7 for information 

about getting these publications and forms.

Filing Requirements

If you are a U.S. citizen or resident alien, the rules for filing 

income, estate, and gift tax returns and for paying estimated tax are generally the same whether you are in the United States or abroad.

Your income, filing status, and age generally determine 

whether you must file an income tax return. Generally, you 

must file a return for 2023 if your gross income from worldwide sources is at least the amount shown for your filing 

status in the following table.

Filing Status* Amount

Single ...............................  $13,850

65 or older ........................... $15,700

Head of household ........................ $20,800

65 or older ........................... $22,650

Qualifying surviving spouse ................... $27,700

65 or older ........................... $29,200

Married filing jointly ........................ $27,700

Not living with spouse at end of year ............ $5

One spouse 65 or older ................... $29,200

Both spouses 65 or older .................. $30,700

Married filing separately ..................... $5

* If you are the dependent of another taxpayer, see the Instructions for Form 1040 

(and 1040-SR) for more information on whether you must file a return.

Note. If you are married and entitled to file jointly, use the 

married filing jointly threshold unless your spouse has filed 

a separate return or another taxpayer claims your spouse 

as a dependent.

Gross income. This includes all income you receive in 

the form of money, goods, property, and services that is 

not exempt from tax.

For purposes of determining whether you must file a return, gross income includes any income that you can exclude as foreign earned income or as a foreign housing 

amount.

If you are self-employed, your gross income includes 

the amount on Part I, line 7, of Schedule C (Form 1040).

 519 

 970 

 1040-ES 

 1040-X 

 2350 

 2555 

 4868 

 8822

Self-employed individuals. If your net earnings from 

self-employment are $400 or more, you must file a return 

even if your gross income is below the amount listed for 

your filing status in the table shown earlier. Net earnings 

from self-employment are defined in Pub. 334.

65 or older. You are considered to be age 65 on the day 

before your 65th birthday. For example, if your 65th birthday is on January 1, 2024, you are considered 65 for 

2023.

Residents of U.S. territories. If you are (or were) a 

bona fide resident of a U.S. territory, you may be required 

to file Form 8898. See the instructions for the form, available at IRS.gov/Form8898 for more information.

When To File and Pay

If you file on a calendar-year basis, the due date for filing 

your return is April 15 of the following year. If you file on a 

fiscal year basis (a year ending on the last day of any 

month except December), the due date is 3 months and 

15 days after the close of your fiscal year. In general, the 

tax shown on your return should be paid by the due date 

of the return, without regard to any extension of time for filing the return.

When the due date for doing any act for tax purposes—filing a return, paying taxes, etc.— falls on a Saturday, Sunday, or legal holiday, the due date is delayed until 

the next business day.

A tax return delivered by the U.S. mail or a designated delivery service that is postmarked or dated 

by the delivery service on or before the due date 

is considered to have been filed on or before that date. Go 

to IRS.gov/PDS for the current list of designated services.

Direct Pay option. You can pay online with a direct transfer from your bank account using Direct Pay, the Electronic 

Federal Tax Payment System (EFTPS), or by debit or 

credit card. You can also pay by phone using EFTPS or by 

debit or credit card. For more information, go to IRS.gov/

Payments.

Foreign wire transfers. If you have a U.S. bank account, you can use:

• EFTPS, or

• Federal Tax Collection Service (same-day wire transfer).

If you do not have a U.S. bank account, ask if your financial institution has a U.S. affiliate that can help you make 

same-day wire transfers.

For more information, visit EFTPS.gov. Also, see the International Guide for Paying Federal Taxes Electronically, 

available at download.EFTPS.gov/

International_Taxpayer_Fact_Sheet_1010.pdf.

CAUTION

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4 Chapter 1 Filing Information Publication 54 (2023)
Extensions

You can get an extension of time to file your return. In 

some circumstances, you can also get an extension of 

time to file and pay any tax due.

However, if you pay the tax due after the regular due 

date, interest will be charged from the regular due date 

until the date the tax is paid.

This publication discusses four extensions: an automatic 2-month extension, an automatic 6-month extension, an additional extension for taxpayers out of the country, and an extension of time to meet residency tests. If 

you served in a combat zone or qualified hazardous duty 

area, see Pub. 3 for a discussion of extensions of deadlines.

Automatic 2-month extension. You are allowed an automatic 2-month extension to file your return and pay federal income tax if you are a U.S. citizen or resident alien, 

and on the regular due date of your return:

• You are living outside the United States and Puerto 

Rico and your main place of business or post of duty 

is outside the United States and Puerto Rico, or

• You are in military or naval service on duty outside the 

United States and Puerto Rico.

If you use a calendar year, the regular due date of your 

return is April 15. Even if you are allowed an extension, 

you will have to pay interest on any tax not paid by the regular due date of your return.

Married taxpayers. If you file a joint return, either you 

or your spouse can qualify for the automatic extension. If 

you and your spouse file separate returns, this automatic 

extension applies only to the spouse who qualifies for it.

How to get the extension. To use this automatic 

2-month extension, you must attach a statement to your 

return explaining which of the two situations listed earlier 

qualified you for the extension.

Automatic 6-month extension. If you are not able to file 

your return by the due date, you can generally get an automatic 6-month extension of time to file (but not of time to 

pay). To get this automatic extension, you must file a paper Form 4868 or use IRS e-file (electronic filing). For 

more information about filing electronically, see E-file options, later.

The form must show your properly estimated tax liability 

based on the information available to you.

You may not be eligible. You cannot use the automatic 6-month extension of time to file if:

• You want the IRS to figure your tax, or

• You are under a court order to file by the regular due 

date.

E-file options. You can use e-file to get an extension 

of time to file. You can either file Form 4868 electronically 

or you can pay part or all of your estimate of tax due using 

CAUTION

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a credit or debit card or direct transfer. You can do this by 

phone or over the Internet. You don’t file Form 4868.

First, complete Form 4868 to use as a worksheet. If you 

think you may owe tax when you file your return, use Part II 

of the form to estimate your balance due.

Then, do one of the following.

1. E-file Form 4868. You can use a tax software package with your personal computer or a tax professional 

to file Form 4868 electronically. You will need to provide certain information from your tax return for 2022. 

If you wish to make a payment by electronic funds 

withdrawal, see the instructions for Form 4868. If you 

e-file Form 4868, do not also send a paper Form 4868 

unless you also mail a check or money order for your 

tax payment.

2. E-file and pay by credit or debit card. You can get 

an extension by paying part or all of your estimate of 

tax due by using a credit or debit card. You can do this 

by phone or over the Internet. If you do this, you do 

not file Form 4868. For more information, see the instructions for your tax return.

When to file. Generally, you must request the 

6-month extension by the regular due date of your return.

Previous 2-month extension. If you cannot file your 

return within the automatic 2-month extension period, you 

can generally get an additional 4 months to file your return, for a total of 6 months. The 2-month period and the 

6-month period start at the same time. You have to request the additional 4 months by the new due date allowed by the 2-month extension.

The additional 4 months of time to file (unlike the original 2-month extension) is not an extension of time to pay. 

You must make an accurate estimate of your tax based on 

the information available to you. If you find you cannot pay 

the full amount due with Form 4868, you can still get the 

extension. You will owe interest on the unpaid amount 

from the original due date of the return.

You may also be charged a penalty for paying the tax 

late unless you have reasonable cause for not paying your 

tax when due. Penalties for paying the tax late are assessed from the original due date of your return, unless 

you qualify for the automatic 2-month extension. In that situation, penalties for paying late are assessed from the extended due date of the payment (June 15 for calendar-year taxpayers).

Additional extension of time for taxpayers out of the 

country. In addition to the 6-month extension, taxpayers 

who are out of the country can request a discretionary 

2-month additional extension of time to file their returns (to 

December 15 for calendar year taxpayers).

To request this extension, you must send the IRS a letter explaining the reasons why you need the additional 2 

months. Send the letter by the extended due date (October 15 for calendar year taxpayers) to the following address:

Department of the Treasury

Internal Revenue Service

Austin, TX 73301-0045

Publication 54 (2023) Chapter 1 Filing Information 5
You will not receive any notification from the IRS unless 

your request is denied.

The discretionary 2-month additional extension is not 

available to taxpayers who have an approved extension of 

time to file on Form 2350, discussed next.

Extension of time to meet residency tests. You cannot 

generally get an extension of more than 6 months. However, if you are outside the United States and meet certain 

requirements, you may be able to get a longer extension.

You can get an extension of more than 6 months to file 

your tax return if you need the time to meet either the bona 

fide residence test or the physical presence test to qualify 

for either the foreign earned income exclusion or the foreign housing exclusion or deduction. The tests, the exclusions, and the deduction are explained in chapter 4.

You should request an extension if all three of the following apply.

1. You are a U.S. citizen or resident alien.

2. You expect to meet either the bona fide residence test 

or the physical presence test, but not until after your 

tax return is due.

3. Your tax home is in a foreign country (or countries) 

throughout your period of bona fide residence or 

physical presence, whichever applies.

If you are granted an extension, it will generally be to 30 

days beyond the date on which you can reasonably expect to qualify for an exclusion or deduction under either 

the bona fide residence test or the physical presence test.

How to get an extension. To obtain an extension, file 

Form 2350 either by giving it to a local IRS representative 

or other IRS employee or by mailing it to:

Department of the Treasury

Internal Revenue Service

Austin, TX 73301-0045

You must file Form 2350 by the due date for filing your 

return. Generally, if both your tax home and your abode 

are outside the United States and Puerto Rico on the regular due date of your return and you file on a calendar year 

basis, the due date for filing your return is June 15.

What if tests are not met. If you obtain an extension 

and unforeseen events make it impossible for you to meet 

either the bona fide residence test or the physical presence test, you should file your income tax return as soon 

as possible because you must pay interest on any tax due 

after the regular due date of the return (even though an extension was granted).

You should make any request for an extension 

early, so that if it is denied you still can file your return on time. Otherwise, if you file late and additional tax is due, you may be subject to a penalty.

Return filed before test is met. If you file a return before you meet the bona fide residence test or the physical 

presence test, you must include all income from both U.S. 

and foreign sources and pay the tax on that income. If you 

CAUTION

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later meet either of the tests, you can claim the foreign 

earned income exclusion, the foreign housing exclusion, 

or the foreign housing deduction on Form 1040-X.

Foreign Currency

You must express the amounts you report on your U.S. tax 

return in U.S. dollars. If you receive all or part of your income, or pay some or all of your expenses, in foreign currency, you must translate the foreign currency into U.S. 

dollars. How you do this depends on your functional currency. Your functional currency is generally the U.S. dollar 

unless you are required to use the currency of a foreign 

country.

You must make all federal income tax determinations in 

your functional currency. The U.S. dollar is the functional 

currency for all taxpayers except some qualified business 

units (QBUs). A QBU is a separate and clearly identified 

unit of a trade or business that maintains separate books 

and records.

Even if you have a QBU, your functional currency is the 

dollar if any of the following apply.

• You conduct the business in U.S. dollars.

• The principal place of business is located in the United States.

• You choose to or are required to use the U.S. dollar as 

your functional currency.

• The business books and records are not kept in the 

currency of the economic environment in which a significant part of the business activities is conducted.

Make all income tax determinations in your functional 

currency. If your functional currency is the U.S. dollar, you 

must immediately translate into U.S. dollars all items of income, expense, etc. (including taxes), that you receive, 

pay, or accrue in a foreign currency and that will affect 

computation of your income tax. Use the exchange rate 

prevailing when you receive, pay, or accrue the item. You 

can generally get exchange rates from banks and U.S. 

Embassies. You may also need to recognize foreign currency gain or loss on certain foreign currency transactions. See section 988 and the regulations thereunder.

If you have a QBU with a functional currency that is not 

the U.S. dollar, make all income determinations in the 

QBU's functional currency, and, where appropriate, translate such income or loss at the appropriate exchange rate.

Blocked Income

You must generally report your foreign income in terms of 

U.S. dollars and, with one exception (see Fulbright Grant, 

later), you must pay taxes due on it in U.S. dollars.

If, because of restrictions in a foreign country, your income is not readily convertible into U.S. dollars or into 

other money or property that is readily convertible into 

6 Chapter 1 Filing Information Publication 54 (2023)
U.S. dollars, your income is “blocked” or “deferrable” income. You can report this income in one of the following 

two ways.

• Report the income and pay your federal income tax 

with U.S. dollars that you have in the United States or 

in some other country.

• Postpone the reporting of the income until it becomes 

unblocked.

If you choose to postpone the reporting of the income, 

you must file an information return with your tax return. For 

this information return, you should use another Form 1040 

or 1040-SR labeled “Report of Deferrable Foreign Income, 

pursuant to Rev. Rul. 74-351.” You must declare on the information return that you will include the deferrable income in your taxable income for the year that it becomes 

unblocked. You must also state that you waive any right to 

claim that the deferrable income was includible in your income for any earlier year. For detailed information see 

Rev. Rul. 74-351, 1974-2 C.B. 144.

You must report your income on your information return 

using the foreign currency in which you received that income. If you have blocked income from more than one foreign country, include a separate information return for 

each country.

Income becomes unblocked and reportable for tax purposes when it becomes convertible, or when it is converted, into U.S. dollars or into other money or property that is 

convertible into U.S. currency. Also, if you use blocked income for your personal expenses or dispose of it by gift, 

bequest, or devise, you must treat it as unblocked and reportable.

If you have received blocked income on which you have 

not paid tax, you should check to see whether that income 

is still blocked. If it is not, you should take immediate steps 

to pay tax on it, file a declaration or amended declaration 

of estimated tax, and include the income on your tax return for the year in which the income became unblocked.

If you choose to postpone reporting blocked income 

and in a later tax year you wish to begin including it in 

gross income although it is still blocked, you must obtain 

the permission of the IRS to do so. To apply for permission, file Form 3115, Application for Change in Accounting 

Method. You must also request permission from the IRS 

on Form 3115 if you have not chosen to defer the reporting of blocked income in the past, but now wish to begin 

reporting blocked income under the deferred method. See 

the Instructions for Form 3115 for information on changing 

your accounting method.

Fulbright Grant

All income must be reported in U.S. dollars. In most cases, 

the tax must also be paid in U.S. dollars. If, however, at 

least 70% of your Fulbright grant has been paid in nonconvertible foreign currency (blocked income), you can use 

the currency of the host country to pay the part of the U.S. 

tax that is based on the blocked income.

Paying U.S. tax in foreign currency. To qualify for this 

method of payment, you must prepare a statement that 

shows the following information.

• You were a Fulbright grantee and were paid in nonconvertible foreign currency.

• The total grant you received during the year and the 

amount you received in nonconvertible foreign currency.

• At least 70% of the grant was paid in nonconvertible 

foreign currency.

The statement must be certified by the U.S. educational 

foundation or commission paying the grant or other person having control of grant payments to you.

You should prepare at least two copies of this statement. Attach one copy to your Form 1040 or 1040-SR and 

keep the other copy for identification purposes when you 

make a tax deposit of nonconvertible foreign currency.

Figuring actual tax. When you prepare your income 

tax return, you may owe tax or the entire liability may have 

been satisfied with your estimated tax payments. If you 

owe tax, figure the part due to (and payable in) the nonconvertible foreign currency by using the following formula.

Adjusted gross 

income that is 

blocked income

× Total U.S. tax =

Tax on blocked 

income

Total adjusted 

gross income

You must attach all of the following to the return.

• A copy of the certified statement discussed earlier.

• A detailed statement showing the allocation of tax 

from amounts received in foreign currency and the 

rates of exchange used in determining your tax liability 

in U.S. dollars.

• The original deposit receipt for any balance of tax due 

that you paid in nonconvertible foreign currency.

Figuring estimated tax on nonconvertible foreign 

currency. If you are liable for estimated tax (discussed 

later), figure the amount you can pay to the IRS in nonconvertible foreign currency using the following formula.

Adjusted gross 

income that is blocked 

income

× Total estimated U.S. tax =

Estimated tax on 

blocked income

Total adjusted 

gross income

If you must pay your host country income tax on your 

grant, subtract any estimated foreign tax credit that applies to your grant from the estimated tax on the blocked 

income.

Deposit of foreign currency with disbursing officer. 

Once you have determined the amount of the actual tax or 

estimated tax that you can pay in nonconvertible foreign 

Publication 54 (2023) Chapter 1 Filing Information 7
currency, deposit that amount with the disbursing officer of 

the Department of State in the foreign country in which the 

foundation or commission paying the grant is located.

Estimated tax installments. You can either deposit 

the full estimated tax amount before the first installment 

due date or make four equal payments before the installment due dates. See Estimated Tax Payments, later.

Deposit receipt. Upon accepting the foreign currency, 

the disbursing officer will give you a receipt in duplicate. 

The original of this receipt (showing the amount of foreign 

currency deposited and its equivalent in U.S. dollars) 

should be attached to your Form 1040 or 1040-SR or payment voucher from Form 1040-ES. Keep the copy for your 

records.

Does My Return Have To Be on 

Paper?

IRS e-file (electronic filing) is the fastest, easiest, and most convenient way 

to file your income tax return electronically.

IRS e-file offers accurate, safe, and fast alternatives to filing on paper. IRS computers quickly and automatically 

check for errors or other missing information.

Note. Returns with a foreign address can be e-filed.

How to e-file. There are three ways 

you can e-file.

1. Use your personal computer.

2. Use a volunteer. Many programs offering free tax help 

can e-file your return.

3. Use a tax professional. Most tax professionals can 

e-file your return.

These methods are explained in detail in the instructions 

for your tax return.

Where To File

If any of the following situations apply to you, do not file 

your return with the service center listed for your home 

state.

• You claim the foreign earned income exclusion.

• You claim the foreign housing exclusion or deduction.

• You live in a foreign country.

Instead, use one of the following special addresses. If 

you are not enclosing a check or money order, file your return with:

Department of the Treasury

Internal Revenue Service

Austin, TX 73301-0215 USA

If you are enclosing a check or money order, file your return with:

Internal Revenue Service

P.O. Box 1303

Charlotte, NC 28201-1303 USA

If you do not know where your legal residence is and 

you do not have a principal place of business in the United 

States, you can file with the appropriate address listed 

above.

However, you should not file with the addresses listed 

above if you are a bona fide resident of the U.S. Virgin Islands, Guam, or the Commonwealth of the Northern Mariana Islands during your entire tax year.

Resident of the U.S. Virgin Islands (USVI). If you are a 

bona fide resident of the USVI during your entire tax year, 

you are generally not required to file a U.S. return. However, you must file a return with the USVI.

Send your return to:

Virgin Islands Bureau

of Internal Revenue

6115 Estate Smith Bay

St. Thomas, Virgin Islands 00802

Non-USVI resident with USVI income. If you are a U.S. 

citizen or resident alien and you have income from sources in the USVI or income effectively connected with the 

conduct of a trade or business in the USVI, and you are 

not a bona fide resident of the USVI during your entire tax 

year, you must file identical tax returns with the United 

States and the USVI. File the original return with the United States and file a signed copy of the U.S. return (including all attachments, forms, and schedules) with the Virgin 

Islands Bureau of Internal Revenue. 

You must complete Form 8689 and attach a copy to 

both your U.S. return and your USVI return. You should file 

your U.S. return with the address listed under Where To 

File, earlier.

See Pub. 570 for information about filing U.S. Virgin Islands returns.

Resident of Guam. If you are a bona fide resident of 

Guam during your entire tax year, you should file a return 

with Guam.

Send your return to:

Department of Revenue and Taxation

Government of Guam

P.O. Box 23607

GMF, GU 96921

However, if you have income from sources within Guam 

and you are a U.S. citizen or resident alien, but not a bona 

fide resident of Guam during the entire tax year, you 

should file a return with the United States. Send your return to the address listed under Where To File, earlier.

See Pub. 570 for information about filing Guam returns.

8 Chapter 1 Filing Information Publication 54 (2023)
Resident of the Commonwealth of the Northern Mariana Islands (CNMI). If you are a bona fide resident of 

the CNMI during your entire tax year, you should file a return with the CNMI.

Send your return to:

Division of Revenue and Taxation

Commonwealth of the Northern Mariana Islands

P.O. Box 5234, CHRB

Saipan, MP 96950

However, if you have income from sources within the 

CNMI and you are a U.S. citizen or resident alien, but not 

a bona fide resident of the CNMI during the entire tax year, 

you should file a return with the United States. Send your 

return to the address listed under Where To File, earlier.

See Pub. 570 for information about filing CNMI returns.

Note. Puerto Rico and American Samoa have their own 

separate and independent tax systems. Although their tax 

laws are modeled on the U.S. Internal Revenue Code, 

there are certain differences in law and tax rates. See Pub. 

570 for information about tax obligations in Puerto Rico 

and American Samoa.

Nonresident Alien Spouse 

Treated as a Resident

If, at the end of your tax year, you are married and one 

spouse is a U.S. citizen or resident alien and the other is a 

nonresident alien, you can choose to treat the nonresident 

as a U.S. resident. This election includes situations in 

which one of you is a nonresident alien at the beginning of 

the tax year and a resident alien at the end of the year and 

the other is a nonresident alien at the end of the year.

If you make this choice, the following two rules apply.

• You and your spouse are treated, for income tax purposes and purposes of wage withholding, as U.S. residents for the tax year in which the election is made 

and all future tax years until the election is terminated 

or suspended because neither spouse is a citizen or 

resident of the United States at any time during a year.

• You must file a joint income tax return for the year you 

make the choice and attach a statement as described 

under How To Make the Choice, later.

This means that neither of you can claim under any tax 

treaty not to be a U.S. resident for a tax year for which the 

choice is in effect.

Example 1. Pat Smith, a U.S. citizen, is married to 

Norman, a nonresident alien. Pat and Norman make the 

choice to treat Norman as a resident alien by attaching a 

statement to their joint return. Pat and Norman must report 

their worldwide income for the year they make the choice 

and for all later years unless the choice is ended or suspended. Although Pat and Norman must file a joint return 

for the year they make the choice, they can file either joint 

or separate returns for later years.

Example 2. When Bob and Sharon Williams got married, both were nonresident aliens. In June of last year, 

Bob became a resident alien and remained a resident for 

the rest of the year. Bob and Sharon both choose to be 

treated as resident aliens by attaching a statement to their 

joint return for last year. Bob and Sharon must report their 

worldwide income for last year and all later years unless 

the choice is ended or suspended. Bob and Sharon must 

file a joint return for last year, but they can file either joint 

or separate returns for later years.

If you do not choose to treat your nonresident 

alien spouse as a U.S. resident, you may be able 

to use head of household filing status. To use this 

status, you must pay more than half the cost of maintaining a household for certain dependents or relatives other 

than your nonresident alien spouse. For more information, 

see Pub. 501.

Social Security Number (SSN)

If you choose to treat your nonresident alien spouse as a 

U.S. resident, your spouse must have either an SSN or an 

individual taxpayer identification number (ITIN).

To get an SSN for a nonresident alien spouse, apply at 

an office of the U.S. Social Security Administration (SSA) 

or U.S. consulate. For more information go to SSA.gov or 

call 800-772-1213.

If the nonresident alien spouse is not eligible to get an 

SSN, the spouse can file Form W-7 with the IRS to apply 

for an ITIN when you timely file the joint return on which 

you choose to treat your nonresident alien spouse as a 

U.S. resident. Follow the Instructions for Form W-7 to submit your Form W-7 and file your return.

Individual taxpayer identification number (ITIN) renewal. Your spouse may need to renew the ITIN. For 

more information, go to IRS.gov/ITIN.

How To Make the Choice

Attach a statement, signed by both spouses, to your joint 

return for the first tax year for which the choice applies. It 

should contain the following.

• A declaration that one spouse was a nonresident alien 

and the other spouse a U.S. citizen or resident alien 

on the last day of your tax year and that you choose to 

be treated as U.S. residents for the entire tax year.

• The name, address, and SSN (or ITIN) of each 

spouse. (If one spouse died, include the name and 

address of the person making the choice for the deceased spouse.)

You generally make this choice when you file your joint 

return. However, you can also make the choice by filing a 

joint amended return on Form 1040-X. Attach Form 1040 

or 1040-SR and enter “Amended” across the top of the 

TIP

Publication 54 (2023) Chapter 1 Filing Information 9
amended return. If you make the choice with an amended 

return, you and your spouse must also amend any returns 

that you may have filed after the year for which you made 

the choice.

You must generally file the amended joint return within 

3 years from the date you filed your original U.S. income 

tax return or 2 years from the date you paid your income 

tax for that year, whichever is later.

Suspending the Choice

The choice to be treated as a resident alien does not apply to any later tax year if neither of you is a U.S. citizen or 

resident alien at any time during the later tax year.

Example. Dick Brown was a resident alien on December 31, 2020, and married to Judy, a nonresident alien. 

They chose to treat Judy as a resident alien and filed joint 

income tax returns for 2020 and 2021. On January 10, 

2022, Dick became a nonresident alien. Judy had remained a nonresident alien. Because Dick was a resident 

alien during part of 2022, Dick and Judy can file joint or 

separate returns for that year. Neither Dick nor Judy was a 

resident alien at any time during 2023 and their choice is 

suspended for that year. For 2023, both are treated as 

nonresident aliens. If Dick becomes a resident alien again 

in 2024, their choice is no longer suspended and both are 

treated as resident aliens.

Ending the Choice

Once made, the choice to be treated as a resident applies 

to all later years unless suspended (as explained earlier) 

or ended in one of the ways shown in Table 1-1.

If the choice is ended for any of the reasons listed in Table 1-1, neither spouse can make a choice in any later tax 

year.

Estimated Tax Payments

The requirements for determining who must pay estimated 

tax are the same for a U.S. citizen or resident abroad as 

for a taxpayer in the United States. 

In general, you don’t have to make estimated tax payments if you expect that your 2024 Form 1040 or 1040-SR 

will show a tax refund or a tax balance due of less than 

$1,000. For more information on whether you are required 

to make estimated tax payments see Form 1040-ES and 

Estimated Tax for 2023 in Pub. 505 (2024).

Foreign earned income exclusion. When figuring your 

estimated gross income, subtract amounts you expect to 

exclude under the foreign earned income exclusion and 

the foreign housing exclusion. In addition, you can reduce 

your income by your estimated foreign housing deduction. 

However, you must estimate tax on your nonexcluded income using the tax rates that will apply had you not excluded the income. If the actual amount of the exclusion or 

deduction is less than you estimate, you may have to pay 

a penalty for underpayment of estimated tax.

For more information, see the Instructions for Form 

2555.

Other Forms You May Have To 

File

FinCEN Form 114. You must file FinCEN Form 114, Report of Foreign Bank and Financial Accounts (FBAR), if 

you had any financial interest in, or signature or other authority over, a bank, securities, or other financial account 

in a foreign country. You do not need to file the report if the 

assets are with a U.S. military banking facility operated by 

a financial institution or if the combined assets in the account(s) are $10,000 or less during the entire year.

Table 1-1. Options for Ending the Choice To Treat Nonresident Alien Spouse as a Resident

Revocation Either spouse can revoke the choice for any tax year.

The revocation must be made by the due date for filing the tax return for that tax year.

The spouse who revokes the choice must attach a signed statement declaring that the choice is being revoked. The statement 

revoking the choice must include the following.

• The name, address, and SSN (or TIN) of each spouse.

• The name and address of any person who is revoking the choice for a deceased spouse.

• A list of any states, foreign countries, and U.S. territories that have community property laws in which either spouse is 

domiciled or where real property is located from which either spouse receives income. 

If the spouse revoking the choice does not have to file a return and does not file a claim for refund, send the statement to the Internal 

Revenue Service Center where the last joint return was filed.

Death The death of either spouse ends the choice, beginning with the first tax year following the year in which the spouse died.

If the qualifying surviving spouse is a U.S. citizen or resident alien and is entitled to the joint tax rates as a qualifying surviving 

spouse, the choice will not end until the close of the last year for which these joint rates may be used.

If both spouses die in the same tax year, the choice ends on the first day after the close of the tax year in which the spouses died.

Divorce or legal 

separation

A divorce or legal separation ends the choice as of the beginning of the tax year in which the legal separation occurs.

Inadequate records The IRS can end the choice for any tax year that either spouse has failed to keep adequate books, records, and other 

information necessary to determine the correct income tax liability, or to provide adequate access to those records.

10 Chapter 1 Filing Information Publication 54 (2023)
FinCEN Form 114 is filed electronically with the Financial Crimes Enforcement Network (FinCEN). The due date 

for FBAR filings is April 15. FinCEN will grant an automatic 

extension to October 15 if you are unable to meet the 

FBAR annual due date of April 15. The FBAR due date for 

foreign financial accounts maintained during calendar 

year 2023 is April 15, 2024, to coincide with the filing date 

for the 2023 Form 1040 or 1040-SR. For more information, 

go to irs.gov/businesses/small-businesses-self-employed/

report-of-foreign-bank-and-financial-accounts-fbar.l.

FinCEN Form 105. You must file FinCEN Form 105, Report of International Transportation of Currency or Monetary Instruments, if you physically transport, mail, ship, or 

cause to be physically transported, mailed, or shipped, 

into or out of the United States, currency or other monetary instruments totaling more than $10,000 at one time. 

Certain recipients of currency or monetary instruments 

must also file FinCEN Form 105.

More information about the filing of FinCEN Form 105 

can be found in the instructions on the back of the form, 

available at fincen.gov/sites/default/files/shared/

fin105_cmir.pdf.

Form 8938. You must file Form 8938 to report the ownership of specified foreign financial assets if the total value 

of those assets exceeds an applicable threshold amount 

(the “reporting threshold”). The reporting threshold varies 

depending on whether you live in the United States, are 

married, or file a joint income tax return with your spouse. 

Specified foreign financial assets include any financial account maintained by a foreign financial institution and, to 

the extent held for investment, any stock, securities, or any 

other interest in a foreign entity and any financial instrument or contract with an issuer or counterparty that is not 

a U.S. person.

You may have to pay penalties if you are required to file 

Form 8938 and fail to do so, or if you have an understatement of tax due to any transaction involving an undisclosed foreign financial asset.

More information about the filing of Form 8938 can be 

found in the separate Instructions for Form 8938.

2.

Withholding Tax

Topics

This chapter discusses:

• Withholding income tax from the pay of U.S. citizens,

• Withholding tax at a flat rate, and

• Social security and Medicare taxes.

Useful Items

You may want to see:

Publication

Tax Withholding and Estimated Tax

Form (and Instructions)

Statement for Claiming Exemption From 

Withholding on Foreign Earned Income Eligible 

for the Exclusion Provided by Section 911

Employee's Withholding Allowance Certificate

Request for Taxpayer Identification Number and 

Certification

See chapter 7 for information about getting this publication 

and these forms.

Income Tax Withholding

U.S. employers must generally withhold U.S. income tax 

from the pay of U.S. citizens working abroad unless the 

employer is required by foreign law to withhold foreign income tax.

Foreign earned income exclusion. Your employer 

does not have to withhold U.S. income taxes from wages 

you earn abroad if it is reasonable to believe that you will 

exclude them from income under the foreign earned income exclusion or the foreign housing exclusion.

Your employer should withhold taxes from any wages 

you earn for working in the United States.

Statement. You can give a statement to your employer 

indicating that you expect to qualify for the foreign earned 

income exclusion under either the bona fide residence test 

or the physical presence test and indicating your estimated housing cost exclusion.

Form 673 is an acceptable statement. You can use 

Form 673 only if you are a U.S. citizen. You do not have to 

use the form and can prepare your own statement. For 

more information, go to IRS.gov/Form 673.

Generally, your employer can stop the withholding once 

you submit the statement that includes a declaration that 

the statement is made under penalties of perjury. However, if your employer has reason to believe that you will 

not qualify for either the foreign earned income or the foreign housing exclusion, your employer must continue to 

withhold.

Your employer must consider any information about pay 

you received from any other source outside the United 

States in determining whether your foreign earned income 

is more than the limit on either the foreign earned income 

exclusion or the foreign housing exclusion.

Foreign tax credit. If you plan to take a foreign tax credit, 

you may be able to adjust your withholding on Form W-4. 

You can take these additional tax credits only for foreign 

tax credits attributable to taxable salary or wage income. 

For more information, see the instructions for Step 3 of 

Form W-4.

 505

 673

 W-4

 W-9

Publication 54 (2023) Chapter 2 Withholding Tax 11
Withholding from pension payments. U.S. payers of 

benefits from employer-deferred compensation plans, individual retirement plans, and commercial annuities must 

generally withhold income tax from payments delivered 

outside of the United States. You can choose exemption 

from withholding if you:

• Provide the payer of the benefits with a residence address in the United States or a U.S. territory, or

• Certify to the payer that you are not a U.S. citizen or 

resident alien or someone who left the United States 

to avoid tax.

Check your withholding. Before you report U.S. income 

tax withholding on your tax return, you should carefully review all information documents, such as Form W-2 and 

the Form 1099 information returns. Compare other records, such as final pay records or bank statements, with 

Form W-2 or Form 1099 to verify the withholding on these 

forms. Check your U.S. income tax withholding even if you 

pay someone else to prepare your tax return. You may be 

assessed penalties and interest if you claim more than 

your correct amount of withholding allowances.

30% Flat Rate Withholding

Generally, U.S. source gross income that is not effectively 

connected to a U.S. trade or business, such as U.S. 

source dividends and royalties, is subject to withholding 

tax at a flat 30% (or lower treaty) rate if paid to nonresident 

aliens. If you are a U.S. citizen or resident alien and this 

tax is withheld in error from payments to you because you 

have a foreign address, you should notify the payer of the 

income to stop the withholding. Use Form W-9 to notify 

the payer.

You can claim the tax withheld in error as a withholding 

credit on your tax return if the amount isn’t adjusted by the 

payer. See the Instructions for Form 1040 for how to claim 

the credit.

Social security benefits paid to residents. If you are a 

lawful permanent resident (green card holder) and a flat 

30% tax was withheld in error on your social security benefits, you must file a Form 1040 or 1040-SR with the Internal Revenue Service Center at the address listed under 

Where To File, earlier, to determine if you are entitled to a 

refund. The following information must be submitted with 

your Form 1040 or 1040-SR.

• A copy of Form SSA-1042S, Social Security Benefit 

Statement.

• A copy of your “green card.”

• A signed declaration that includes the following statements.

“I am a U.S. lawful permanent resident and my green 

card has been neither revoked nor administratively or 

judicially determined to have been abandoned. I am 

filing a U.S. income tax return for the tax year as a resident alien reporting all of my worldwide income. I 

have not claimed benefits for the tax year under an income tax treaty as a nonresident alien.”

Social Security and Medicare 

Taxes

Social security and Medicare taxes may apply to wages 

paid to an employee regardless of where the services are 

performed.

General Information

In general, U.S. social security and Medicare taxes do not 

apply to wages for services you perform as an employee 

outside the United States unless one of the following exceptions applies.

1. You perform the services on or in connection with an 

American vessel or aircraft (defined later) and either:

a. You entered into your employment contract within 

the United States, or

b. The vessel or aircraft touches at a U.S. port while 

you are employed on it.

2. The service is designated as employment for U.S. social security and Medicare tax purposes under a bilateral social security (totalization) agreement (discussed later).

3. You are working for an American employer (defined 

later).

4. You are working for a foreign affiliate (defined later) of 

an American employer under a voluntary agreement 

entered into between the American employer and the 

U.S. Department of the Treasury.

American vessel or aircraft. An American vessel is any 

vessel documented or numbered under the laws of the 

United States and any other vessel whose crew is employed solely by one or more U.S. citizens, residents, or 

corporations. An American aircraft is an aircraft registered 

under the laws of the United States.

American employer. An American employer includes 

any of the following.

• The U.S. Government or any of its instrumentalities.

• An individual who is a resident of the United States.

• A partnership of which at least two-thirds of the partners are U.S. residents.

• A trust of which all the trustees are U.S. residents.

• A corporation organized under the laws of the United 

States, any U.S. state, or the District of Columbia, Puerto Rico, the U.S. Virgin Islands, Guam, or American 

Samoa.

An American employer also includes any foreign person with an employee who is performing services in connection with a contract between the U.S. Government (or 

12 Chapter 2 Withholding Tax Publication 54 (2023)
any instrumentality thereof) and a member of a domestically controlled group of entities which includes such foreign person.

Foreign affiliate. A foreign affiliate of an American employer is any foreign entity in which the American employer has at least a 10% interest, directly or through one 

or more entities. For a corporation, the 10% interest must 

be in its voting stock. For any other entity, the 10% interest 

must be in its profits.

Form 2032 is used by American employers to extend 

social security coverage to U.S. citizens and resident aliens working abroad for foreign affiliates of American employers. Once you enter into an agreement, coverage cannot be terminated.

Excludable meals and lodging. Social security tax 

doesn’t apply to the value of meals and lodging provided 

to you for the convenience of your employer if it is reasonable to believe that you will be able to exclude the value 

from your income.

Bilateral Social Security (Totalization) 

Agreements

The United States has entered into agreements with some 

foreign countries to coordinate social security coverage 

and taxation of workers who are employed in those countries. These agreements are commonly referred to as “totalization agreements.” Under these agreements, dual 

coverage and dual contributions (taxes) for the same work 

are eliminated. The agreements generally make sure that 

you pay social security taxes to only one country.

Generally, under these agreements, you will only be 

subject to social security taxes in the country where you 

are working. However, if you are temporarily sent to work 

in a foreign country and your pay would otherwise be subject to social security taxes in both the United States and 

that country, you can generally remain covered only by 

U.S. social security.

You can get more information on specific agreements at 

SSA.gov/International/ Agreement and IRS.gov/

TotalizationAgreements.

You can write to:

Social Security Administration

Office of Data Exchange

and International Agreements

6401 Security Blvd., 4700 Annex

Baltimore, MD 21235

You may also contact the Office of Earnings and 

International Operations by phone if you speak 

English. You can call the office at 410-965-0160. 

You will need to pay for the call because it is not a toll-free 

service for calls from outside the United States. If you call, 

please do so between 9:00 a.m. and 4:00 p.m. Eastern 

U.S. Time.

Covered by United States only. If your pay in a foreign 

country is subject only to U.S. social security tax and is exempt from foreign social security tax, your employer 

should get a certificate of coverage from the SSA’s Office 

of Earnings and International Operations. Employers can 

request a certificate of coverage online at SSA.gov/

international/CoC_link.html.

Covered by foreign country only. If you are permanently working in a foreign country with which the United 

States has a social security agreement and, under the 

agreement, your pay is exempt from U.S. social security 

tax, you or your employer should get a statement from the 

authorized official or agency of the foreign country verifying that your pay is subject to social security coverage in 

that country.

If the authorities of the foreign country will not issue 

such a statement, either you or your employer should get 

a statement from the U.S. SSA’s Office of Earnings and International Operations at the website listed earlier. The 

statement should indicate that your wages aren’t covered 

by the U.S. social security system.

This statement should be kept by your employer because it establishes that your pay is exempt from U.S. social security tax.

Only wages paid on or after the effective date of the totalization agreement can be exempt from U.S. social security tax.

3.

Self-Employment Tax

Topics

This chapter discusses:

• Who must pay self-employment tax,

• Who is exempt from self-employment tax,

• Who can defer self-employment tax payments, and

• Which self-employed individuals can take the 

refundable income tax credits for sick and family 

leave.

Useful Items

You may want to see:

Publication

334 Tax Guide for Small Business

517 Social Security and Other Information for 

Members of the Clergy and Religious Workers

 334

 517

Publication 54 (2023) Chapter 3 Self-Employment Tax 13
Form (and Instructions)

lanilla para la Declaración de 

la Contribución Federal sobre el Trabajo por 

Cuenta Propia

U.S. Self-Employment Tax Return

Application for Exemption From 

Self-Employment Tax for Use by Ministers, 

Members of Religious Orders and Christian 

Science Practitioners

Self-Employment Tax

See chapter 7 for information about getting these publications and forms.

Who Must Pay 

Self-Employment Tax?

If you are a self-employed U.S. citizen or resident, the 

rules for paying self-employment tax are generally the 

same whether you are living in the United States or 

abroad.

The self-employment tax is a social security and Medicare tax on net earnings from self-employment. You must 

pay self-employment tax if your net earnings from self-employment are at least $400.

For 2023, the maximum amount of net earnings from 

self-employment that is subject to the social security portion of the tax is $160,200. All net earnings are subject to 

the Medicare portion of the tax. Additional Medicare Tax 

may apply to you if your net earnings from self-employment exceed a threshold amount (based on your filing status).

Employed by a U.S. Church

If you were employed by a U.S. church or a qualified 

church-controlled organization that chose exemption from 

social security and Medicare taxes and you received wages of $108.28 or more from the organization, the 

amounts paid to you are subject to self-employment tax. 

However, you can choose to be exempt from social security and Medicare taxes if you are a member of a recognized religious sect. See Pub. 517 for more information 

about church employees and self-employment tax.

Effect of Exclusion

You must take all of your self-employment income into account in figuring your net earnings from self-employment, 

even income that is exempt from income tax because of 

the foreign earned income exclusion.

Example. You are in business abroad as a consultant 

and qualify for the foreign earned income exclusion. Your 

foreign earned income is $95,000, your business deductions total $27,000, and your net profit is $68,000. You 

must pay self-employment tax on your net profit of 

 Formulario 1040-PR

 Form 1040-SS

 Form 4361

 Schedule SE (Form 1040)

$68,000, even though you are qualified for the foreign 

earned income exclusion.

Members of the Clergy

If you are a member of the clergy, you are treated as 

self-employed for self-employment tax purposes. Your 

U.S. self-employment tax is based upon net earnings from 

self-employment figured without regard to the foreign 

earned income exclusion or the foreign housing exclusion.

You can receive exemption from coverage for your ministerial duties if you conscientiously oppose public insurance due to religious reasons or if you oppose it due to the 

religious principles of your denomination. You must file 

Form 4361 to apply for this exemption.

This subject is discussed in further detail in Pub. 517.

Income From U.S. Territories

If you are a U.S. citizen or resident alien and you own and 

operate a business in a U.S. territory (Puerto Rico, Guam, 

the Commonwealth of the Northern Mariana Islands, 

American Samoa, or the U.S. Virgin Islands), you must 

pay tax on your net earnings from self-employment (if they 

are $400 or more) from those sources. You must pay the 

self-employment tax whether or not the income is exempt 

from U.S. income taxes (or whether or not you must otherwise file a U.S. income tax return). Unless your situation is 

described below, attach Schedule SE (Form 1040) to your 

U.S. income tax return.

If you do not have to file Form 1040 or 1040-SR with the 

United States and you are a resident of any of the U.S. territories listed in the preceding paragraph, figure your 

self-employment tax on Form 1040-SS. Residents of Puerto Rico may file the Spanish-language Formulario 

1040-PR.

If you are not enclosing a check or money order, file 

your return with:

Department of the Treasury

Internal Revenue Service

Austin, TX 73301-0215

If you are enclosing a check or money order, file your 

return with:

Internal Revenue Service

P.O. Box 1303

Charlotte, NC 28201-1303

Exemption From Dual-Country 

Social Security and Medicare 

Taxes

The United States may reach agreements with foreign 

countries to eliminate dual coverage and dual 

14 Chapter 3 Self-Employment Tax Publication 54 (2023)
contributions (taxes) to social security systems for the 

same work. See Bilateral Social Security (Totalization) 

Agreements in chapter 2 under Social Security and Medicare Taxes. As a general rule, self-employed persons who 

are subject to dual taxation will only be covered by the social security system of the country where they reside. For 

more information on how a specific agreement affects 

self-employed persons, see Bilateral Social Security (Totalization) Agreements in chapter 2.

If your self-employment earnings should be exempt 

from foreign social security tax and subject only to U.S. 

self-employment tax, you should request a certificate of 

coverage from the U.S. SSA’s Office of Earnings and International Operations. The certificate will establish your exemption from the foreign social security tax.

You can request a certificate of coverage online at 

SSA.gov/international/CoC_link.html.

4.

Foreign Earned Income 

and Housing: Exclusion – 

Deduction

Topics

This chapter discusses:

• Who qualifies for the foreign earned income exclusion 

and the foreign housing exclusion or the foreign 

housing deduction;

• The requirements that must be met to claim either of 

the exclusions or the deduction;

• How to determine the amount of the foreign earned 

income exclusion; and

• How to determine the amount of foreign housing 

exclusion and the foreign housing deduction.

Useful Items

You may want to see:

Publication

19 U.S. Tax Guide for Aliens

570 Tax Guide for Individuals With Income From 

U.S. Possessions

596 Earned Income Credit (EIC)

Form (and Instructions)

1040-X Amended U.S. Individual Income Tax Return

 519

 570

 596

 1040-X

Foreign Earned Income

See chapter 7 for information about getting these publications and forms.

Who Qualifies for the 

Exclusions and the Deduction?

If you meet certain requirements, you may qualify for the 

foreign earned income exclusion and foreign housing exclusion or the foreign housing deduction.

If you are a U.S. citizen or resident alien and you live 

abroad, you are taxed on your worldwide income. However, you may qualify to exclude from income up to 

$120,000 of your foreign earnings. In addition, you can exclude or deduct certain foreign housing amounts. See Foreign Earned Income Exclusion and Foreign Housing Exclusion and Deduction, later.

You may also be entitled to exclude from income the 

value of meals and lodging provided to you by your employer. See Exclusion of Meals and Lodging, later.

Requirements

To claim the foreign earned income exclusion and the foreign housing exclusion, or the foreign housing deduction, 

you must meet all three of the following requirements:

1. Your tax home must be in a foreign country.

2. You must have foreign earned income.

3. You must be one of the following.

a. A U.S. citizen who is a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year.

b. A U.S. resident alien who is a citizen or national of 

a country with which the United States has an income tax treaty in effect and who is a bona fide 

resident of a foreign country or countries for an uninterrupted period that includes an entire tax year.

c. A U.S. citizen or a resident alien who is physically 

present in a foreign country or countries for at 

least 330 full days during any period of 12 consecutive months.

See Pub. 519 to find out if you are a U.S. resident alien 

for tax purposes and whether you keep that alien status 

when you temporarily work abroad.

If you are a nonresident alien married to a U.S. citizen 

or resident alien, and both you and your spouse choose to 

treat you as a resident alien, you are a resident alien for 

tax purposes. For information on making the choice, see 

the discussion in chapter 1 under Nonresident Alien 

Spouse Treated as a Resident.

Waiver of minimum time requirements. The minimum 

time requirements for bona fide residence and physical 

 2555

Publication 54 (2023) Chapter 4 Foreign Earned Income and Housing: 

Exclusion – Deduction

15
presence can be waived if you must leave a foreign country because of war, civil unrest, or similar adverse conditions in that country. This is fully explained under Waiver of 

Time Requirements, later.

See Figure 4-A and information in this chapter to determine if you are eligible to claim either one of the exclusions or the deduction.

Tax Home in Foreign Country

To qualify for the foreign earned income exclusion and the 

foreign housing exclusion, or the foreign housing deduction, your tax home must be in a foreign country throughout your period of bona fide residence or physical presence abroad. See Bona Fide Residence Test and Physical 

Presence Test, later.

Tax Home

Your tax home is the general area of your main place of 

business, employment, or post of duty, regardless of 

where you maintain your family home. Your tax home is 

the place where you are permanently or indefinitely engaged to work as an employee or self-employed individual. Having a “tax home” in a given location doesn’t necessarily mean that the given location is your residence or 

domicile for tax purposes.

If you do not have a regular or main place of business 

because of the nature of your work, your tax home may be 

the place where you regularly live. If you have neither a 

regular or main place of business nor a place where you 

regularly live, you are considered an itinerant and your tax 

home is wherever you work.

You aren’t considered to have a tax home in a foreign 

country for any period in which your abode is in the United 

States, unless you are serving in support of the U.S. 

Armed Forces in an area designated as a combat zone. 

See Service in a combat zone, later. Otherwise, if your 

abode is in the United States, you will not meet the tax 

home test and cannot claim the foreign earned income exclusion.

The location of your abode is based on where you 

maintain your family, economic, and personal ties. Your 

abode is not necessarily in the United States merely because you maintain a dwelling in the United States, 

whether or not your spouse or dependents use the dwelling. Your abode is also not necessarily in the United 

States while you are temporarily in the United States; however, these factors can contribute to your having an abode 

in the United States.

Example 1. You are employed on an offshore oil rig in 

the territorial waters of a foreign country and work a 

28-day on/28-day off schedule. You return to your family 

residence in the United States during your off periods. You 

are considered to have an abode in the United States and 

don’t satisfy the tax home test in the foreign country. You 

can’t claim either of the exclusions or the housing deduction.

Example 2. For several years, you were a marketing 

executive with a producer of machine tools in Toledo, 

Ohio. In November of last year, your employer transferred 

you to London, England, for a minimum of 18 months to 

set up a sales operation for Europe. Before you left, you 

distributed business cards showing your business and 

home addresses in London. You kept ownership of your 

home in Toledo but rented it to another family. You placed 

your car in storage. In November of last year, you moved 

your spouse, children, furniture, and family pets to a home 

your employer rented for you in London.

Shortly after moving, you leased a car and you and 

your spouse got British driver’s licenses. Your entire family 

got library cards for the local public library. You and your 

spouse opened bank accounts with a London bank and 

secured consumer credit. You joined a local business league and both you and your spouse became active in the 

neighborhood civic association and worked with a local 

charity. Your abode is in London for the time you live there. 

You satisfy the tax home test in the foreign country.

Service in a combat zone. U.S. citizens or residents 

serving in an area designated by the President of the United States by Executive Order as a combat zone for purposes of section 112 in support of the U.S. Armed Forces 

can qualify as having a tax home in a foreign country, even 

if they have an abode within the United States. For a list of 

IRS-recognized combat zones, go to IRS.gov/Newsroom/

Combat-Zones.

Temporary or Indefinite Assignment

The location of your tax home often depends on whether 

your assignment is temporary or indefinite. If you are temporarily absent from your tax home in the United States on 

business, you may be able to deduct your 

away-from-home expenses (for travel, meals, and lodging), but you wouldn’t qualify for the foreign earned income exclusion. If your new work assignment is for an indefinite period, your new place of employment becomes 

your tax home and you wouldn’t be able to deduct any of 

the related expenses that you have in the general area of 

this new work assignment. If your new tax home is in a foreign country and you meet the other requirements, your 

earnings may qualify for the foreign earned income exclusion.

If you expect your employment away from home in a 

single location to last, and it does last, for 1 year or less, it 

is temporary unless facts and circumstances indicate otherwise.

If you expect it to last for more than 1 year, it is indefinite.

If you expect it to last for 1 year or less, but at some 

later date you expect it to last longer than 1 year, it is temporary (in the absence of facts and circumstances indicating otherwise) until your expectation changes. Once your 

expectation changes, it is indefinite.

16 Chapter 4 Foreign Earned Income and Housing: 

Exclusion – Deduction

Publication 54 (2023)
Foreign Country

To meet the bona fide residence test or the physical presence test, you must live in or be present in a foreign country. A foreign country includes any territory under the sovereignty of a government other than that of the United 

States.

The term “foreign country” includes the country's airspace and territorial waters, but not international waters 

and the airspace above them. It also includes the seabed 

and subsoil of those submarine areas adjacent to the 

country's territorial waters over which it has exclusive 

rights under international law to explore and exploit the 

natural resources.

The term “foreign country” doesn’t include Antarctica or 

U.S. territories such as Puerto Rico, Guam, the Commonwealth of the Northern Mariana Islands, the U.S. Virgin Islands, and American Samoa. For purposes of the foreign 

earned income exclusion, the foreign housing exclusion, 

and the foreign housing deduction, the terms “foreign,” 

“abroad,” and “overseas” refer to areas outside the United 

States and those areas listed or described in the previous 

sentence.

American Samoa, Guam, and the 

Commonwealth of the Northern Mariana 

Islands

Residence or presence in a U.S. territory doesn’t qualify 

you for the foreign earned income exclusion. You may, 

however, qualify for an exclusion of your territory income 

on your U.S. return.

American Samoa. There is a territory exclusion available 

to individuals who are bona fide residents of American Samoa for the entire tax year. Gross income from sources 

within American Samoa may be eligible for this exclusion. 

Income that is effectively connected with the conduct of a 

trade or business within American Samoa may also be eligible for this exclusion. Use Form 4563 to figure the exclusion.

Guam and the Commonwealth of the Northern Mariana Islands. An exclusion will be available to residents 

Yes No

No Yes Yes

No

Yes

No

Yes

Yes

No

Yes

No

No

Start Here

Figure 4-A. Can I Claim Either Exclusion or the Deduction?

Do you have foreign

earned income?

Is your tax home in a

foreign country? Are you a U.S. citizen? Are you a U.S. resident

alien?

Were you a bona de

resident of a foreign

country or countries

for an uninterrupted

period that includes an

entire tax year?

Are you a citizen or

national of a country

with which the United

States has an income

tax treaty in effect?

You CAN claim the

foreign earned income

exclusion and the

foreign housing

exclusion or the foreign

housing deduction.*

Were you physically

present in a foreign

country or countries for

at least 330 full days

during any period of 12

consecutive months?

You CANNOT claim the foreign earned income exclusion, the

foreign housing exclusion, or the foreign housing deduction.

* Foreign housing exclusion applies only to employees. Foreign housing deduction applies only to the self-employed.

Publication 54 (2023) Chapter 4 Foreign Earned Income and Housing: 

Exclusion – Deduction

17
of Guam and the Commonwealth of the Northern Mariana 

Islands if, and when, new implementation agreements 

take effect between the United States and those territories.

For more information, see Pub. 570.

Puerto Rico and the U.S. Virgin Islands

Residents of Puerto Rico and the U.S. Virgin Islands can’t 

claim the foreign earned income exclusion or the foreign 

housing exclusion.

Puerto Rico. Generally, if you are a U.S. citizen who is a 

bona fide resident of Puerto Rico for the entire tax year, 

you aren’t subject to U.S. tax on income from Puerto Rican 

sources. This doesn’t include amounts paid for services 

performed as an employee of the United States. However, 

you are subject to U.S. tax on your income from sources 

outside Puerto Rico. In figuring your U.S. tax, you can’t deduct expenses allocable to income not subject to tax.

Bona Fide Residence Test

You meet the bona fide residence test if you are a bona 

fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year. You can 

use the bona fide residence test to qualify for the exclusions and the deduction only if you are either:

• A U.S. citizen, or

• A U.S. resident alien who is a citizen or national of a 

country with which the United States has an income 

tax treaty in effect.

You do not automatically acquire bona fide resident status merely by living in a foreign country or countries for 1 

year. If you go to a foreign country to work on a particular 

job for a specified period of time, you won’t ordinarily be 

regarded as a bona fide resident of that country even 

though you work there for 1 tax year or longer. The length 

of your stay and the nature of your job are only two of the 

factors to be considered in determining whether you meet 

the bona fide residence test.

Bona fide residence. To meet the bona fide residence 

test, you must have established a bona fide residence in a 

foreign country.

Your bona fide residence isn’t necessarily the same as 

your domicile. Your domicile is your permanent home, the 

place to which you always return or intend to return.

Example. You could have your domicile in Cleveland, 

Ohio, and a bona fide residence in Edinburgh, Scotland, if 

you intend to return eventually to Cleveland.

The fact that you go to Scotland does not automatically 

make Scotland your bona fide residence. If you go there 

as a tourist, or on a short business trip, and return to the 

United States, you haven’t established bona fide residence in Scotland. But if you go to Scotland to work for an 

indefinite or extended period and you set up permanent 

quarters there for yourself and your family, you have probably established a bona fide residence in a foreign 

country, even though you intend to return eventually to the 

United States.

You are clearly not a resident of Scotland in the first instance. However, in the second, you are a resident because your stay in Scotland appears to be permanent. If 

your residency is not as clearly defined as either of these 

illustrations, it may be more difficult to decide whether you 

have established a bona fide residence.

Determination. Questions of bona fide residence are 

determined according to each individual case, taking into 

account factors such as your intention, the purpose of 

your trip, and the nature and length of your stay abroad.

To meet the bona fide residence test, you must show 

the IRS that you have been a bona fide resident of a foreign country or countries for an uninterrupted period that 

includes an entire tax year. The IRS decides whether you 

are a bona fide resident of a foreign country largely on the 

basis of facts you report on Form 2555. The IRS cannot 

make this determination until you file Form 2555.

Statement to foreign authorities. You aren’t considered 

a bona fide resident of a foreign country if you make a 

statement to the authorities of that country that you aren’t 

a resident of that country, and the authorities:

• Hold that you aren’t subject to their income tax laws as 

a resident, or

• Haven’t made a final decision on your status.

Special agreements and treaties. An income tax exemption provided in a treaty or other international agreement won’t in itself prevent you from being a bona fide resident of a foreign country. Whether a treaty prevents you 

from becoming a bona fide resident of a foreign country is 

determined under all provisions of the treaty, including 

specific provisions relating to residence or privileges and 

immunities.

Example 1. You are a U.S. citizen employed in the United Kingdom by a U.S. employer under contract with the 

U.S. Armed Forces. You aren’t subject to the North Atlantic Treaty Status of Forces Agreement. You may be a bona 

fide resident of the United Kingdom.

Example 2. You are a U.S. citizen in the United Kingdom who qualifies as an “employee” of an armed service 

or as a member of a “civilian component” under the North 

Atlantic Treaty Status of Forces Agreement. You aren’t a 

bona fide resident of the United Kingdom.

Example 3. You are a U.S. citizen employed in Japan 

by a U.S. employer under contract with the U.S. Armed 

Forces. You are subject to the agreement of the Treaty of 

Mutual Cooperation and Security between the United 

States and Japan. Being subject to the agreement doesn’t 

make you a bona fide resident of Japan.

Example 4. You are a U.S. citizen employed as an “official” by the United Nations in Switzerland. You are exempt from Swiss taxation on the salary or wages paid to 

you by the United Nations. This doesn’t prevent you from 

being a bona fide resident of Switzerland.

18 Chapter 4 Foreign Earned Income and Housing: 

Exclusion – Deduction

Publication 54 (2023)
Effect of voting by absentee ballot. If you are a U.S. 

citizen living abroad, you can vote by absentee ballot in 

any election held in the United States without risking your 

status as a bona fide resident of a foreign country.

However, if you give information to the local election officials about the nature and length of your stay abroad that 

does not match the information you give for the bona fide 

residence test, the information given in connection with 

absentee voting will be considered in determining your 

status, but won’t necessarily be conclusive.

Uninterrupted period including entire tax year. To 

meet the bona fide residence test, you must reside in a 

foreign country or countries for an uninterrupted period 

that includes an entire tax year. An entire tax year is from 

January 1 through December 31 for taxpayers who file 

their income tax returns on a calendar-year basis.

During the period of bona fide residence in a foreign 

country, you can leave the country for brief or temporary 

trips back to the United States or elsewhere for vacation or 

business. To keep your status as a bona fide resident of a 

foreign country, you must have a clear intention of returning from such trips, without unreasonable delay, to your 

foreign residence or to a new bona fide residence in another foreign country.

Example 1. You arrived with your family in Lisbon, Portugal, on November 1, 2022. Your assignment is indefinite, 

and you intend to live there with your family until your company sends you to a new post. You immediately established residence there. You spent April of 2023 at a business conference in the United States. Your family stayed 

in Lisbon. Immediately following the conference, you returned to Lisbon and continued living there. On January 1, 

2024, you completed an uninterrupted period of residence 

for a full tax year (2023), and you meet the bona fide residence test.

Example 2. Assume the same facts as in Example 1, 

except that you transferred back to the United States on 

December 13, 2023. You would not meet the bona fide 

residence test because your bona fide residence in the 

foreign country, although it lasted more than a year, didn’t 

include a full tax year. You may, however, qualify for the 

foreign earned income exclusion or the housing exclusion 

or deduction under the physical presence test (discussed 

later).

Bona fide resident for part of a year. Once you have 

established bona fide residence in a foreign country for an 

uninterrupted period that includes an entire tax year, you 

are a bona fide resident of that country for the period starting with the date you actually began the residence and 

ending with the date you abandon the foreign residence. 

Your period of bona fide residence can include an entire 

tax year plus parts of 2 other tax years.

Example. You were a bona fide resident of Singapore 

from March 1, 2021, through September 14, 2023. On 

September 15, 2023, you returned to the United States. 

Since you were a bona fide resident of a foreign country 

for all of 2022, you were also a bona fide resident of a 

foreign country from March 1, 2021, through the end of 

2021 and from January 1, 2023, through September 14, 

2023.

Reassignment. If you are assigned from one foreign 

post to another, you may or may not have a break in foreign residence between your assignments, depending on 

the circumstances.

Example 1. You were a resident of Pakistan from October 1, 2022, through November 30, 2023. On December 

1, 2023, you and your family returned to the United States 

to wait for an assignment to another foreign country. Your 

household goods were also returned to the United States.

Your foreign residence ended on November 30, 2023, 

and did not begin again until after you were assigned to 

another foreign country and physically entered that country. Since you weren’t a bona fide resident of a foreign 

country for the entire tax year of 2022 or 2023, you don’t 

meet the bona fide residence test in either year. You may, 

however, qualify for the foreign earned income exclusion 

or the housing exclusion or deduction discussed under 

Physical Presence Test, later.

Example 2. Assume the same facts as in Example 1, 

except that upon completion of your assignment in Pakistan you were given a new assignment to Turkey. On December 1, 2023, you and your family returned to the United States for a month's vacation. On January 2, 2024, 

you arrived in Turkey for your new assignment. Because 

you didn’t interrupt your bona fide residence abroad, you 

meet the bona fide residence test.

Physical Presence Test

You meet the physical presence test if you are physically 

present in a foreign country or countries for 330 full days 

during a period of 12 consecutive months. The 330 days 

don’t have to be consecutive. Any U.S. citizen or resident 

alien can use the physical presence test to qualify for the 

exclusions and the deduction.

The physical presence test is based only on how long 

you stay in a foreign country or countries. This test doesn’t 

depend on the kind of residence you establish, your intentions about returning, or the nature and purpose of your 

stay abroad.

330 full days. Generally, to meet the physical presence 

test, you must be physically present in a foreign country or 

countries for at least 330 full days during a 12-month period. You can count days you spent abroad for any reason. 

You don’t have to be in a foreign country only for employment purposes. You can be on vacation.

You don’t meet the physical presence test if illness, 

family problems, a vacation, or your employer's orders 

cause you to be present for less than the required amount 

of time.

Exception. You can be physically present in a foreign 

country or countries for less than 330 full days and still 

meet the physical presence test if you are required to 

Publication 54 (2023) Chapter 4 Foreign Earned Income and Housing: 

Exclusion – Deduction

19
leave a country because of war or civil unrest. See Waiver 

of Time Requirements, later.

Full day. A full day is a period of 24 consecutive hours, 

beginning at midnight.

Travel. When you leave the United States to go directly to 

a foreign country or when you return directly to the United 

States from a foreign country, the time you spend on or 

over international waters doesn’t count toward the 

330-day total.

Example. You leave the United States for France by air 

on June 10. You arrive in France at 9:00 a.m. on June 11. 

Your first full day of physical presence in France is June 

12.

Passing over foreign country. If, in traveling from the 

United States to a foreign country, you pass over a foreign 

country before midnight of the day you leave, the first day 

you can count toward the 330-day total is the day following 

the day you leave the United States.

Example. You leave the United States by air at 9:30 

a.m. on June 10 to travel to Kenya. You pass over western 

Africa at 11:00 p.m. on June 10 and arrive in Kenya at 

12:30 a.m. on June 11. Your first full day in a foreign country is June 11.

Change of location. You can move about from one 

place to another in a foreign country or to another foreign 

country without losing full days. If any part of your travel is 

not within any foreign country and takes less than 24 

hours, you are considered to be in a foreign country during 

that part of travel.

Example 1. You leave Ireland by air at 11:00 p.m. on 

July 6 and arrive in Sweden at 3:00 a.m. on July 7. Your 

trip takes less than 24 hours and you lose no full days.

Example 2. You leave Norway by ship at 10:00 p.m. on 

July 6 and arrive in Portugal at 6:00 a.m. on July 8. Since 

your travel isn’t within a foreign country or countries and 

the trip takes more than 24 hours, you lose as full days 

July 6, 7, and 8. If you remain in Portugal, your next full 

day in a foreign country is July 9.

In United States while in transit. If you are in transit 

between two points outside the United States and are 

physically present in the United States for less than 24 

hours, you aren’t treated as present in the United States 

during the transit. You are treated as traveling over areas 

not within any foreign country.

How to figure the 12-month period. There are four 

rules you should know when figuring the 12-month period.

• Your 12-month period can begin with any day of the 

month. It ends the day before the same calendar day, 

12 months later.

• Your 12-month period must be made up of consecutive months. Any 12-month period can be used if the 

330 days in a foreign country fall within that period.

• You don’t have to begin your 12-month period with 

your first full day in a foreign country or end it with the 

day you leave. You can choose the 12-month period 

that gives you the greatest exclusion.

• In determining whether the 12-month period falls 

within a longer stay in the foreign country, 12-month 

periods can overlap one another.

Example 1. You are a construction worker who works 

on and off in a foreign country over a 20-month period. 

You might pick up the 330 full days in a 12-month period 

only during the middle months of the time you work in the 

foreign country because the first few and last few months 

of the 20-month period are broken up by long visits to the 

United States.

Example 2. You work in New Zealand for a 20-month 

period from January 1, 2022, through August 31, 2023, 

except that you spend 28 days in February 2022 and 28 

days in February 2023 on vacation in the United States. 

You are present in New Zealand for at least 330 full days 

during each of the following two 12-month periods: January 1, 2022–December 31, 2022, and September 1, 

2022–August 31, 2023. By overlapping the 12-month periods in this way, you meet the physical presence test for 

the whole 20-month period. See Figure 4-B.

Waiver of Time Requirements

Both the bona fide residence test and the physical presence test contain minimum time requirements. The minimum time requirements can be waived, however, if you 

must leave a foreign country because of war, civil unrest, 

or similar adverse conditions in that country. You must be 

able to show that you could have reasonably expected to 

meet the minimum time requirements if not for the adverse 

conditions. To qualify for the waiver, you must actually 

have your tax home in the foreign country and be a bona 

Figure 4-B. How To Figure Overlapping 12-Month Periods

First Full 12-Month Period

* 28-day vacation in the United States Second Full 12-Month Period

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug

’23

*

This gure illustrates Example 2 under How to figure the 12-month period.

* ’22 ’22 ’22 ’22 ’22 ’22 ’22 ’22 ’22 ’22 ’22 ’22 ’23 ’23 ’23 ’23 ’23 ’23 ’23

20 Chapter 4 Foreign Earned Income and Housing: 

Exclusion – Deduction

Publication 54 (2023)
fide resident of, or be physically present in, the foreign 

country on or before the beginning date of the waiver.

Early in 2024, the IRS will publish in the Internal Revenue Bulletin a list of the only countries that qualify for the 

waiver for 2023 and the effective dates. If you left one of 

the countries on or after the date listed for each country, 

you can meet the bona fide residence test or physical 

presence test for 2023 without meeting the minimum time 

requirement. However, in figuring your exclusion, the number of your qualifying days of bona fide residence or physical presence includes only days of actual residence or 

presence within the country.

U.S. Travel Restrictions

If you are present in a foreign country in violation of U.S. 

law, you will not be treated as a bona fide resident of a foreign country or as physically present in a foreign country 

while you are in violation of the law. Income that you earn 

from sources within such a country for services performed 

during a period of violation does not qualify as foreign 

earned income. Your housing expenses within that country 

(or outside that country for housing your spouse or dependents) while you are in violation of the law cannot be 

included in figuring your foreign housing amount.

At the time this publication was released, the only country to which travel restrictions applied during 2023 was 

Cuba. However, individuals working at the U.S. Naval 

Base at Guantanamo Bay in Cuba are not in violation of 

U.S. law. Personal service income earned by individuals at 

the base is eligible for the foreign earned income exclusion, provided the other requirements are met.

For current information about travel restrictions go 

to Travel.state.gov/content/travel/en/internationaltravel.html.

Foreign Earned Income

To claim the foreign earned income exclusion, the foreign 

housing exclusion, or the foreign housing deduction, you 

must have foreign earned income.

Foreign earned income is generally income you receive 

for services you perform during a period in which you 

meet both of the following requirements.

• Your tax home is in a foreign country.

• You meet either the bona fide residence test or the 

physical presence test.

To determine whether your tax home is in a foreign country, see Tax Home in Foreign Country, earlier. To determine whether you meet either the bona fide residence test 

or the physical presence test, see Bona Fide Residence 

Test and Physical Presence Test, earlier.

Foreign earned income does not include the following 

amounts.

• The value of meals and lodging that you exclude from 

your income because the meals and lodging were 

furnished for the convenience of your employer.

• Pension or annuity payments you receive, including 

social security benefits (see Pensions and annuities, 

later).

• Pay you receive as an employee of the U.S. Government. (See U.S. Government Employees, later.)

• Amounts you include in your income because of your 

employer's contributions to a nonexempt employee 

trust or to a nonqualified annuity contract.

• Payments you receive after the end of the tax year following the tax year in which you performed the services that earned the income.

Earned income. This is pay for personal services performed, such as wages, salaries, or professional fees. The 

list that follows classifies many types of income into three 

categories. The column headed Variable Income lists income that may fall into either the earned income category, 

the unearned income category, or partly into both. For 

more information on earned and unearned income, see 

Earned and Unearned Income, later.

Earned Income Unearned Income Variable Income

Salaries and wages Dividends Business profits

Commissions Interest Royalties

Bonuses Capital gains Rents

Professional fees Gambling winnings Scholarships and 

fellowships

Tips Alimony

Social security benefits

Pensions

Annuities

In addition to the types of earned income listed, certain 

noncash income and allowances or reimbursements are 

considered earned income.

Noncash income. The fair market value of property or facilities provided to you by your employer in the form of 

lodging, meals, or use of a car is earned income.

Allowances or reimbursements. Earned income includes allowances or reimbursements you receive, such 

as the following amounts.

• Cost-of-living allowances.

• Overseas differential.

• Family allowance.

• Reimbursement for education or education allowance.

• Home leave allowance.

• Quarters allowance.

• Reimbursement for moving or moving allowance (unless excluded from income as discussed later in Reimbursement of employee expenses under Earned and 

Unearned Income).

Publication 54 (2023) Chapter 4 Foreign Earned Income and Housing: 

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21
Source of Earned Income

The source of your earned income is the place where you 

perform the services for which you received the income. 

Foreign earned income is income you receive for working 

in a foreign country. Where or how you are paid has no effect on the source of the income. For example, income you 

receive for work done in Austria is income from a foreign 

source even if the income is paid directly to your bank account in the United States and your employer is located in 

New York City.

Example. You are a U.S. citizen, a bona fide resident 

of Canada, and working as a mining engineer. Your salary 

is $76,800 per year. You also receive a $6,000 cost-of-living allowance, and a $6,000 education allowance. Your 

employment contract did not indicate that you were entitled to these allowances only while outside the United 

States. Your total income is $88,800. You work a 5-day 

week, Monday through Friday. After subtracting your vacation, you have a total of 240 workdays in the year. You 

worked in the United States during the year for 6 weeks 

(30 workdays). The following shows how to figure the part 

of your income that is for work done in Canada during the 

year.

Number of days 

worked in Canada 

during the year (210)

Number of days of × Total income ($88,800) = $77,700

work during the year 

for which payment 

was made (240)

Your foreign source earned income is $77,700.

Earned and Unearned Income

Earned income was defined earlier as pay for personal 

services performed. Some types of income are not easily 

identified as earned or unearned income. Some of these 

types of income are further explained here.

Income from a sole proprietorship or partnership. Income from a business in which capital investment is an 

important part of producing the income may be unearned 

income. If you are a sole proprietor or partner and your 

personal services are also an important part of producing 

the income, the part of the income that represents the 

value of your personal services will be treated as earned 

income.

Capital a factor. If capital investment is an important 

part of producing income, no more than 30% of your share 

of the net profits of the business is earned income.

If you have no net profits, the part of your gross profit 

that represents a reasonable allowance for personal services actually performed is considered earned income. Because you do not have a net profit, the 30% limit does not 

apply.

Example 1. You are a U.S. citizen and meet the bona 

fide residence test. You invest in a partnership based in 

Cameroon that is engaged solely in selling merchandise 

outside the United States. You perform no services for the 

partnership. At the end of the tax year, your share of the 

net profits is $80,000. The entire $80,000 is unearned income.

Example 2. Assume that in Example 1 you spend time 

operating the business. Your share of the net profits is 

$80,000; 30% of your share of the profits is $24,000. If the 

value of your services for the year is $15,000, your earned 

income is limited to the value of your services, $15,000.

Capital not a factor. If capital is not an income-producing factor and personal services produce the business 

income, the 30% rule does not apply. The entire amount of 

business income is earned income.

Example. You and Lou Green are management consultants and operate as equal partners in performing services outside the United States. Because capital is not an 

income-producing factor, all the income from the partnership is considered earned income.

Income from a corporation. The salary you receive 

from a corporation is earned income only if it represents a 

reasonable allowance as compensation for work you do 

for the corporation. Any amount over what is considered a 

reasonable salary is unearned income.

Example 1. You are a U.S. citizen and an officer and 

stockholder of a corporation in Honduras. You perform no 

work or service of any kind for the corporation. During the 

tax year, you receive a $10,000 “salary” from the corporation. The $10,000 clearly is not for personal services and 

is unearned income.

Example 2. You are a U.S. citizen and work full time as 

secretary-treasurer of your corporation. During the tax 

year, you receive $100,000 as salary from the corporation. 

If $80,000 is a reasonable allowance as pay for the work 

you did, then $80,000 is earned income.

Stock options. You may have earned income if you disposed of stock that you got by exercising a stock option 

granted to you under an employee stock purchase plan.

If your gain on the disposition of stock you got by exercising an option is treated as capital gain, your gain is unearned income.

However, if you disposed of the stock less than 2 years 

after you were granted the option or less than 1 year after 

you got the stock, part of the gain on the disposition may 

be earned income. It is considered received in the year 

you disposed of the stock and earned in the year you performed the services for which you were granted the option. Any part of the earned income that is due to work you 

did outside the United States is foreign earned income.

See Pub. 525, Taxable and Nontaxable Income, for a 

discussion of the treatment of stock options.

Pensions and annuities. For purposes of the foreign 

earned income exclusion, the foreign housing exclusion, 

and the foreign housing deduction, amounts received as 

pensions or annuities are unearned income.

22 Chapter 4 Foreign Earned Income and Housing: 

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Publication 54 (2023)
Royalties. Royalties from the leasing of oil and mineral 

lands and patents are generally a form of rent or dividends 

and are unearned income.

Royalties received by a writer are earned income if they 

are received:

• For the transfer of property rights of the writer in the 

writer's product, or

• Under a contract to write a book or series of articles.

Rental income. Generally, rental income is unearned income. If you perform personal services in connection with 

the production of rent, up to 30% of your net rental income 

can be considered earned income.

Example. Larry Smith, a U.S. citizen living in Australia, 

owns and operates a rooming house in Sydney. If he is operating the rooming house as a business that requires 

capital and personal services, he can consider up to 30% 

of net rental income as earned income. On the other hand, 

if he just owns the rooming house and performs no personal services connected with its operation, except perhaps making minor repairs and collecting rents, none of 

his net income from the house is considered earned income. It is all unearned income.

Professional fees. If you are engaged in a professional 

occupation (such as a doctor or lawyer), all fees received 

in the performance of these services are earned income.

Income of an artist. Income you receive from the sale of 

paintings you created is earned income.

Scholarships and fellowships. Any portion of a scholarship or fellowship grant that is paid to you for teaching, 

research, or other services is considered earned income if 

you must include it in your gross income. If the payer of 

the grant is required to provide you with a Form W-2, 

these amounts will be listed as wages.

Certain scholarship and fellowship income may 

be exempt under other provisions. For more information, see Pub. 970.

Use of employer's property or facilities. If you receive 

fringe benefits in the form of the right to use your employer's property or facilities, the fair market value of that right 

is earned income. Fair market value is the price at which 

the property would change hands between a willing buyer 

and a willing seller, neither being required to buy or sell, 

and both having reasonable knowledge of all the necessary facts.

Example. You are privately employed and live in Japan 

all year. You are paid a salary of $6,000 a month. You live 

rent-free in a house provided by your employer that has a 

fair rental value of $3,000 a month. The house is not provided for your employer's convenience. You report on the 

calendar-year, cash basis. You received $72,000 salary 

from foreign sources plus $36,000 fair rental value of the 

house, or a total of $108,000 of earned income.

TIP

Reimbursement of employee expenses. If you are reimbursed under an accountable plan (defined later) for expenses you incur on your employer's behalf and you have 

adequately accounted to your employer for the expenses, 

do not include the reimbursement for those expenses in 

your earned income.

The expenses for which you are reimbursed are not 

considered allocable (related) to your earned income. If 

expenses and reimbursement are equal, there is nothing 

to allocate to excluded income. If expenses are more than 

the reimbursement, the unreimbursed expenses are considered to have been incurred in producing earned income and must be divided between your excluded and included income. (See chapter 5.) If the reimbursement is 

more than the expenses, no expenses remain to be divided between excluded and included income and the excess reimbursement must be included in earned income.

These rules do not apply to the following individuals.

• Straight-commission salespersons.

• Employees who have arrangements with their employers under which taxes are not withheld on a percentage of the commissions because the employers consider that percentage to be attributable to the 

employees' expenses.

Accountable plan. An accountable plan is a reimbursement or allowance arrangement that includes all 

three of the following rules.

• The expenses covered under the plan must have a 

business connection.

• The employee must adequately account to the employer for these expenses within a reasonable period 

of time.

• The employee must return any excess reimbursement 

or allowance within a reasonable period of time.

Reimbursement of moving expenses. For tax years 

beginning after 2017, you can no longer deduct moving 

expenses. If you received a reimbursement of moving expenses, please note that, in most cases, reimbursement 

of moving expenses will be earned income. This section 

discusses reimbursements that must be included in 

earned income.

The rules for determining when the reimbursement is 

considered earned or where the reimbursement is considered earned may differ somewhat from the general rules 

previously discussed.

Although you receive the reimbursement in one tax 

year, it may be considered earned for services performed, 

or to be performed, in another tax year. You must report 

the reimbursement as income on your return in the year 

you receive it, even if it is considered earned during a different year.

Moving expenses are only deductible for members of the U.S. Armed Forces who move pursuant to a military order and incident to a permanent change of station. Therefore, the exclusion from 

earned income for qualified moving expenses is, generally, only available to members of the U.S. Armed Forces.

CAUTION

!

Publication 54 (2023) Chapter 4 Foreign Earned Income and Housing: 

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23
Move from United States to foreign country. If you 

move from the United States to a foreign country, your 

moving expense reimbursement is generally considered 

pay for future services to be performed at the new location. The reimbursement is considered earned solely in 

the year of the move if you qualify for the exclusion for a 

period that includes at least 120 days during that tax year.

If you are neither a bona fide resident of nor physically 

present in a foreign country or countries for a period that 

includes 120 days during the year of the move, a portion 

of the reimbursement is considered earned in the year of 

the move and a portion is considered earned in the year 

following the year of the move. To figure the amount 

earned in the year of the move, multiply the reimbursement by a fraction. The numerator (top number) is the 

number of days in your qualifying period that fall within the 

year of the move, and the denominator (bottom number) is 

the total number of days in the year of the move.

The difference between the total reimbursement and 

the amount considered earned in the year of the move is 

the amount considered earned in the year following the 

year of the move. The part earned in each year is figured 

as shown in the following example.

Example. You are a U.S. citizen working in the United 

States. You were told in October 2022 that you were being 

transferred to a foreign country. You arrived in the foreign 

country on December 15, 2022, and you are a bona fide 

resident for the remainder of 2022 and all of 2023. Your 

employer reimbursed you $2,000 in January 2023 for your 

moving expense. Because you did not qualify for the exclusion under the bona fide residence test for at least 120 

days in 2022 (the year of the move), the reimbursement is 

considered pay for services performed in the foreign 

country for both 2022 and 2023.

You figure the part of the reimbursement for services 

performed in the foreign country in 2022 by multiplying the 

total reimbursement by a fraction. The fraction is the number of days during which you were a bona fide resident in 

2022 (the year of the move) divided by 365. The remaining 

part of the reimbursement is for services performed in the 

foreign country in 2023.

This computation is used only to determine when the 

reimbursement is considered earned. You would include 

the amount of the reimbursement in income in 2023, the 

year you received it.

Move between foreign countries. If you move between foreign countries, any moving expense reimbursement that you must include in income will be considered 

earned in the year of the move if you qualify for the foreign 

earned income exclusion for a period that includes at least 

120 days in the year of the move.

Move to United States. If you move to the United 

States, the moving expense reimbursement that you must 

include in income is generally considered to be U.S. 

source income.

However, if under either an agreement between you 

and your employer or a statement of company policy that 

is reduced to writing before your move to the foreign country, your employer will reimburse you for your move back 

to the United States regardless of whether you continue to 

work for the employer, the includible reimbursement is 

considered compensation for past services performed in 

the foreign country. The includible reimbursement is considered earned in the year of the move if you qualify for the 

foreign earned income exclusion for a period that includes 

at least 120 days during that year. Otherwise, you treat the 

includible reimbursement as received for services performed in the foreign country in the year of the move and 

the year immediately before the year of the move.

See the discussion under Move from United States to 

foreign country, earlier, to figure the amount of the includible reimbursement considered earned in the year of the 

move. The amount earned in the year before the year of 

the move is the difference between the total includible reimbursement and the amount earned in the year of the 

move.

Example. You are a U.S. citizen employed in a foreign 

country. You retired from employment with your employer 

on March 31, 2023, and returned to the United States on 

the same day, after having been a bona fide resident of 

the foreign country for several years. A written agreement 

with your employer entered into before you went abroad 

provided that you would be reimbursed for your move 

back to the United States.

In April 2023, your former employer reimbursed you 

$4,000 for the cost of your move back to the United 

States. Because you were not a bona fide resident of a 

foreign country or countries for a period that included at 

least 120 days in 2023 (the year of the move), the includible reimbursement is considered pay for services performed in the foreign country for both 2023 and 2022.

You figure the part of the moving expense reimbursement for services performed in the foreign country for 

2023 by multiplying the total includible reimbursement by 

a fraction. The fraction is the number of days of foreign 

residence during the year (90) (January 1 to March 31, 

2023, equals 90 days) divided by the number of days in 

the year (365). The remaining part of the includible reimbursement is for services performed in the foreign country 

in 2022. You report the amount of the includible reimbursement in 2023, the year you received it.

In this example, if you met the physical presence 

test for a period that included at least 120 days in 

2023, the moving expense reimbursement would 

be considered earned entirely in the year of the move.

Storage expense reimbursements. If you are reimbursed for storage expenses, the reimbursement is for 

services you perform during the period of time for which 

the storage expenses are incurred. 

U.S. Government Employees

For purposes of the foreign earned income exclusion, the 

foreign housing exclusion, and the foreign housing deduction, foreign earned income does not include any amounts 

paid by the United States or any of its agencies to its employees. This includes amounts paid from both appropriated and nonappropriated funds.

TIP

24 Chapter 4 Foreign Earned Income and Housing: 

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Publication 54 (2023)
The following organizations (and other organizations 

similarly organized and operated under U.S. Army, Navy, 

or Air Force regulations) are integral parts of the Armed 

Forces, agencies, or instrumentalities of the United States.

• U.S. Armed Forces exchanges.

• Commissioned and noncommissioned officers' messes.

• Armed Forces motion picture services.

• Kindergartens on foreign Armed Forces installations.

Amounts paid by the United States or its agencies to 

persons who aren’t their employees may qualify for exclusion or deduction.

If you are a U.S. Government employee paid by a U.S. 

agency that assigned you to a foreign government to perform specific services for which the agency is reimbursed 

by the foreign government, your pay is from the U.S. Government and doesn’t qualify for exclusion or deduction.

If you have questions about whether you are an employee or an independent contractor, get Pub. 15-A.

American Institute in Taiwan. Amounts paid by the 

American Institute in Taiwan aren’t foreign earned income 

for purposes of the foreign earned income exclusion, the 

foreign housing exclusion, or the foreign housing deduction. If you are an employee of the American Institute in 

Taiwan, allowances you receive are exempt from U.S. tax 

up to the amount that equals tax-exempt allowances received by civilian employees of the U.S. Government.

Allowances. Cost-of-living and foreign-area allowances 

paid under certain acts of Congress to U.S. civilian officers and employees stationed in Alaska and Hawaii or 

elsewhere outside the 48 contiguous states and the District of Columbia can be excluded from gross income. Post 

differentials are wages that must be included in gross income, regardless of the act of Congress under which they 

are paid.

More information. Pub. 516 has more information for 

U.S. Government employees abroad.

Exclusion of Meals and Lodging

You don’t include in your income the value of meals and 

lodging provided to you and your family by your employer 

at no charge if the following conditions are met.

1. The meals are furnished:

a. On the business premises of your employer, and

b. For the convenience of your employer.

2. The lodging is furnished:

a. On the business premises of your employer,

b. For the convenience of your employer, and

c. As a condition of your employment.

If these conditions are met, don’t include the value of 

the meals or lodging in your income, even if a law or your 

employment contract says that they are provided as compensation.

Amounts you don’t include in income because of these 

rules aren’t foreign earned income.

If you receive a Form W-2, excludable amounts 

shouldn’t be included in the total reported in box 1 as wages.

Family. Your family, for this purpose, includes only your 

spouse and your dependents.

Lodging. The value of lodging includes the cost of heat, 

electricity, gas, water, sewer service, and similar items 

needed to make the lodging fit to live in.

Business premises of employer. Generally, the business premises of your employer is wherever you work. For 

example, if you work as a housekeeper, meals and lodging 

provided in your employer's home are provided on the 

business premises of your employer. Similarly, meals provided to cowhands while herding cattle on land leased or 

owned by their employer are considered provided on the 

premises of their employer.

Convenience of employer. Whether meals or lodging 

are provided for your employer's convenience must be determined from all the facts and circumstances. Meals furnished at no charge are considered provided for your employer's convenience if there is a good business reason 

for providing them, other than to give you more pay.

On the other hand, if your employer provides meals to 

you or your family as a means of giving you more pay, and 

there is no other business reason for providing them, their 

value is extra income to you because they aren’t furnished 

for the convenience of your employer.

Condition of employment. Lodging is provided as a 

condition of employment if you must accept the lodging to 

properly carry out the duties of your job. You must accept 

lodging to properly carry out your duties if, for example, 

you must be available for duty at all times or you could not 

perform your duties if the lodging wasn’t furnished.

Foreign camps. If the lodging is in a camp located in a 

foreign country, the camp is considered part of your employer's business premises. The camp must be:

• Provided for your employer's convenience because 

the place where you work is in a remote area where 

satisfactory housing isn’t available to you on the open 

market within a reasonable commuting distance,

• Located as close as reasonably possible in the area 

where you work, and

• Provided in a common area or enclave that isn’t available to the general public for lodging or accommodations and that normally houses at least 10 employees.

Publication 54 (2023) Chapter 4 Foreign Earned Income and Housing: 

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25
Foreign Earned Income 

Exclusion

If your tax home is in a foreign country and you meet the 

bona fide residence test or the physical presence test, you 

can choose to exclude from your income a limited amount 

of your foreign earned income. Foreign earned income 

was defined earlier in this chapter.

You can also choose to exclude from your income a foreign housing amount. This is explained later under Foreign Housing Exclusion. If you choose to exclude a foreign 

housing amount, you must figure the foreign housing exclusion before you figure the foreign earned income exclusion. Your foreign earned income exclusion is limited to 

your foreign earned income minus your foreign housing 

exclusion.

If you choose to exclude foreign earned income, you 

cannot deduct, exclude, or claim a credit for any item that 

can be allocated to or charged against the excluded 

amounts. This includes any expenses, losses, and other 

normally deductible items allocable to the excluded income. For more information about deductions and credits, 

see chapter 5.

Limit on Excludable Amount

You may be able to exclude up to $120,000 of your foreign 

earned income in 2023.

You cannot exclude more than the smaller of:

• $120,000, or

• Your foreign earned income (discussed earlier) for the 

tax year minus your foreign housing exclusion (discussed later).

If both you and your spouse work abroad and each of 

you meets either the bona fide residence test or the physical presence test, you can each choose the foreign 

earned income exclusion. You both don’t need to meet the 

same test. Together, you and your spouse can exclude as 

much as $240,000.

Paid in year following work. Generally, you are considered to have earned income in the year in which you do 

the work for which you receive the income, even if you 

work in one year but are not paid until the following year. If 

you report your income on a cash basis, you report the income on your return for the year you receive it. If you work 

one year, but are not paid for that work until the next year, 

the amount you can exclude in the year you are paid is the 

amount you could have excluded in the year you did the 

work if you had been paid in that year. For an exception to 

this general rule, see Year-end payroll period, later.

Example. You were a bona fide resident of Brazil for 

all of 2022 and 2023. You report your income on the cash 

basis. In 2021, you were paid $87,900 for work you did in 

Brazil during that year. You excluded all of the $87,900 

from your income in 2022.

In 2023, you were paid $124,300 for your work in Brazil. 

$23,800 was for work you did in 2022 and $100,500 was 

for work you did in 2023. You can exclude $20,800 of the 

$23,800 from your income in 2023. This is the $108,700 

maximum exclusion in 2022 minus the $87,900 actually 

excluded that year. You must include the remaining $3,000 

in income in 2023 because you could not have excluded 

that income in 2022 if you had received it that year. You 

can exclude all of the $100,500 you were paid for work 

you did in 2023 from your 2023 income.

Your total foreign earned income exclusion for 2023 is 

$121,300 ($20,800 for work you did in 2022 and $100,500 

for work you did in 2022). You would include in your 2023 

income $3,000 for the work you did in 2022.

Year-end payroll period. There is an exception to the 

general rule that income is considered earned in the year 

you do the work for which you receive the income. If you 

are a cash-basis taxpayer, any salary or wage payment 

you receive after the end of the year in which you do the 

work for which you receive the pay is considered earned 

entirely in the year you receive it if all four of the following 

apply.

• The period for which the payment is made is a normal 

payroll period of your employer that regularly applies 

to you.

• The payroll period includes the last day of your tax 

year (December 31 if you figure your taxes on a calendar-year basis).

• The payroll period is not longer than 16 days.

• The payday comes at the same time in relation to the 

payroll period that it would normally come and it 

comes before the end of the next payroll period.

Example. You are paid twice a month. For the normal 

payroll period that begins on the 1st of the month and 

ends on the 15th of the month, you are paid on the 16th 

day of the month. For the normal payroll period that begins 

on the 16th of the month and ends on the last day of the 

month, you are paid on the 1st day of the following month. 

Because all of the above conditions are met, the pay you 

received on January 1, 2023, is considered earned in 

2023.

Income earned over more than 1 year. Regardless of 

when you actually receive income, you must apply it to the 

year in which you earned it in figuring your excludable 

amount for that year. For example, a bonus may be based 

on work you did over several years. You determine the 

amount of the bonus that is considered earned in a particular year in two steps.

1. Divide the bonus by the number of calendar months in 

the period when you did the work that resulted in the 

bonus.

2. Multiply the result of (1) by the number of months you 

did the work during the year. This is the amount that is 

subject to the exclusion limit for that tax year.

26 Chapter 4 Foreign Earned Income and Housing: 

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Publication 54 (2023)
Income received more than 1 year after it was 

earned. You can’t exclude income you receive after the 

end of the year following the year you do the work to earn 

it.

Example. You were a bona fide resident of Sweden 

for 2021, 2022, and 2023. You report your income on the 

cash basis. In 2021, you were paid $69,000 for work you 

did in Sweden that year, and in 2022, you were paid 

$74,000 for that year's work in Sweden. You excluded all 

the income on your 2021 and 2022 returns.

In 2023, you were paid $92,000; $82,000 for your work 

in Sweden during 2023, and $10,000 for work you did in 

Sweden in 2021. You cannot exclude any of the $10,000 

for work done in 2021 because you received it after the 

end of the year following the year in which you earned it. 

You must include the $10,000 in income. You can exclude 

all of the $82,000 received for work you did in 2023.

Community income. The maximum exclusion applies 

separately to the earnings of spouses. Ignore any community property laws when you figure your limit on the foreign earned income exclusion.

Part-year exclusion. If the period for which you qualify 

for the foreign earned income exclusion includes only part 

of the year, you must adjust the maximum limit based on 

the number of qualifying days in the year. The number of 

qualifying days is the number of days in the year within the 

period on which you both:

• Have your tax home in a foreign country, and

• Meet either the bona fide residence test or the physical presence test.

For this purpose, you can count as qualifying days all 

days within a period of 12 consecutive months once you 

are physically present and have your tax home in a foreign 

country for 330 full days. To figure your maximum exclusion, multiply the maximum excludable amount for the 

year by the number of your qualifying days in the year, and 

then divide the result by the number of days in the year.

Example. You report your income on the calendar-year basis and you qualified for the foreign earned income exclusion under the bona fide residence test for 75 

days in 2023. You can exclude a maximum of 75/365 of 

$120,000, or $24,658 of your foreign earned income for 

2023. If you qualify under the bona fide residence test for 

all of 2024, you can exclude your foreign earned income 

up to the 2024 limit.

Physical presence test. Under the physical presence 

test, a 12-month period can be any period of 12 consecutive months that includes 330 full days. If you qualify for 

the foreign earned income exclusion under the physical 

presence test for part of a year, it is important to carefully 

choose the 12-month period that will allow the maximum 

exclusion for that year.

Note. See How to figure the 12-month period under 

Physical Presence Test, earlier, for the rules on figuring 

the 12-month period.

Example. You are physically present and have your 

tax home in a foreign country for a 16-month period from 

June 1, 2022, through September 30, 2023, except for 16 

days in December 2022 when you were on vacation in the 

United States. You figure the maximum exclusion for 2022 

as follows.

1. Beginning with June 1, 2022, count forward 330 full 

days. Do not count the 16 days you spent in the United States. The 330th day, May 12, 2023, is the last 

day of a 12-month period.

2. Count backward 12 months from May 12, 2023, to 

find the first day of this 12-month period, May 13, 

2022. This 12-month period runs from May 13, 2022, 

through May 12, 2023.

3. Count the total days during 2022 that fall within this 

12-month period. This is 233 days (May 13, 2022–December 31, 2022).

4. Multiply $108,700 (the maximum exclusion for 2022) 

by the fraction 233/365 to find your maximum exclusion for 2022 ($69,389).

You figure the maximum exclusion for 2023 in the opposite manner.

1. Beginning with your last full day, September 30, 2022, 

count backward 330 full days. Do not count the 16 

days you spent in the United States. That day, October 19, 2022, is the first day of a 12-month period.

2. Count forward 12 months from October 19, 2022, to 

find the last day of this 12-month period, October 18, 

2023. This 12-month period runs from October 19, 

2022, through October 18, 2023.

3. Count the total days during 2023 that fall within this 

12-month period. This is 291 days (January 1, 2023 – 

October 18, 2023).

4. Multiply $120,000, the maximum limit, by the fraction 

291/365 to find your maximum exclusion for 2022 

($95,671).

Choosing the Exclusion

The foreign earned income exclusion is voluntary. You can 

choose the exclusion by completing the appropriate parts 

of Form 2555.

When You Can Choose the Exclusion

Your initial choice of the exclusion on Form 2555 must 

generally be made with one of the following returns.

• A return filed by the due date (including any extensions).

• A return amending a timely filed return. Amended returns must generally be filed by the later of 3 years after the filing date of the original return or 2 years after 

the tax is paid.

Publication 54 (2023) Chapter 4 Foreign Earned Income and Housing: 

Exclusion – Deduction

27
• A return filed within 1 year from the original due date of 

the return (determined without regard to any extensions).

Filing after the above periods. You can choose the exclusion on a return filed after the periods described above 

if you owe no federal income tax after taking into account 

the exclusion. If you owe federal income tax after taking 

into account the exclusion, you can choose the exclusion 

on a return filed after the periods described earlier if you 

file before the IRS discovers that you failed to choose the 

exclusion. Whether or not you owe federal income tax after taking the exclusion into account, if you file your return 

after the periods described earlier, you must type or legibly print at the top of the first page of the Form 1040 or 

1040-SR, “Filed pursuant to section 1.911-7(a)(2)(i)(D).”

If you owe federal income tax after taking into account 

the foreign earned income exclusion and the IRS discovered that you failed to choose the exclusion, you may still 

be able to choose the exclusion. You must request a private letter ruling under Regulations section 301.9100-3 

and Revenue Procedure 2021-1, 2021-01 I.R.B. 1, available at IRS.gov/irb/2021-01_IRB#REV-PROC-2021-1.

Effect of Choosing the Exclusion

Once you choose to exclude your foreign earned income, 

that choice remains in effect for that year and all later 

years unless you revoke it.

Foreign tax credit or deduction. Once you choose to 

exclude foreign earned income, you can’t take a foreign 

tax credit or deduction for taxes on income you can exclude. If you do take a credit or deduction for any of those 

taxes in a later year, your election for the foreign earned 

income exclusion will be revoked beginning with that year. 

See Pub. 514 for more information.

Additional child tax credit. You can’t take the additional 

child tax credit if you claim the foreign earned income exclusion.

Earned income credit. If you claim the foreign earned 

income exclusion, you don’t qualify for the earned income 

credit for the year. For more information on this credit, see 

Pub. 596.

Figuring tax on income not excluded. If you claim the 

foreign earned income exclusion, the housing exclusion 

(discussed later), or both, you must figure the tax on your 

nonexcluded income using the tax rates that would have 

applied had you not claimed the exclusions. See the 

Instructions for Form 1040 and complete the Foreign 

Earned Income Tax Worksheet to figure the amount of tax 

to enter on Form 1040 or 1040-SR, line 16. If you must attach Form 6251 to your return, use the Foreign Earned Income Tax Worksheet provided in the Instructions for Form 

6251.

Revoking the Exclusion

You can revoke your choice for any year. You do this by attaching a statement that you are revoking one or more 

previously made choices to the return or amended return 

for the first year that you do not wish to claim the exclusion(s). You must specify which choice(s) you are revoking. You must revoke separately a choice to exclude foreign earned income and a choice to exclude foreign 

housing amounts.

If you revoked a choice and within 5 years again wish to 

choose the same exclusion, you must apply for IRS approval. You do this by requesting a ruling from the IRS.

Mail your request for a ruling, in duplicate, to:

Associate Chief Counsel (International)

Internal Revenue Service

Attn: CC:PA:LPD:DRU

P.O. Box 7604

Ben Franklin Station

Washington, DC 20044

In deciding whether to give approval, the IRS will consider 

any facts and circumstances that may be relevant. These 

may include a period of residence in the United States, a 

move from one foreign country to another foreign country 

with different tax rates, a substantial change in the tax 

laws of the foreign country of residence or physical presence, and a change of employer. For more information go 

to IRS.gov/Individuals/International-Taxpayers/RevokingYour-Choice-to-Exclude-Foreign-Earned-Income.

If a private delivery service is used, the address 

is:

Associate Chief Counsel (International)

Internal Revenue Service

Attn: CC:PA:LPD:TSS, Room 5336

1111 Constitution Ave. NW

Washington, DC 20224

Foreign Housing Exclusion and 

Deduction

In addition to the foreign earned income exclusion, you 

can also claim an exclusion or a deduction from gross income for your housing amount if your tax home is in a foreign country and you qualify for the exclusions and deduction under either the bona fide residence test or the 

physical presence test.

The housing exclusion applies only to amounts considered paid for with employer-provided amounts. The housing deduction applies only to amounts paid for with 

self-employment earnings.

If you are married and you and your spouse each qualifies under one of the tests, see Married Couples, later.

28 Chapter 4 Foreign Earned Income and Housing: 

Exclusion – Deduction

Publication 54 (2023)
Housing Amount

Your housing amount is the total of your housing expenses 

for the year minus the base housing amount.

Base housing amount. The computation of the base 

housing amount (line 32 of Form 2555) is tied to the maximum foreign earned income exclusion. The amount is 

16% of the exclusion amount (computed on a daily basis), 

multiplied by the number of days in your qualifying period 

that fall within your tax year.

For 2023, the maximum foreign earned income exclusion is $120,000 per year; 16% of this amount is $19,200, 

or $56.60 per day. To figure your base housing amount if 

you are a calendar-year taxpayer, multiply $56.60 by the 

number of your qualifying days during 2023. (See 

Part-year exclusion under Limit on Excludable Amount, 

earlier.) Subtract the result from your total housing expenses (up to the applicable limit) to find your housing 

amount.

Example. Your qualifying period includes all of 2023. 

During the year, you spent $19,124 for your housing. This 

is below the limit for the location in which you incurred the 

expenses. Your housing amount is $20,404 minus 

$19,200, or $1,204.

U.S. Government allowance. You must reduce your 

housing amount by any U.S. Government allowance or 

similar nontaxable allowance intended to compensate you 

or your spouse for the expenses of housing during the period for which you claim a foreign housing exclusion or deduction.

Housing expenses. Housing expenses include your reasonable expenses paid or incurred for housing in a foreign 

country for you and (if they live with you) for your spouse 

and dependents.

Consider only housing expenses for the part of the year 

that you qualify for the foreign earned income exclusion.

Housing expenses include:

• Rent,

• The fair rental value of housing provided in kind by 

your employer,

• Repairs,

• Utilities (other than telephone charges),

• Real and personal property insurance,

• Nondeductible occupancy taxes,

• Nonrefundable fees for securing a leasehold,

• Rental of furniture and accessories, and

• Residential parking.

Housing expenses do not include:

• Expenses that are lavish or extravagant under the circumstances;

• Deductible interest and taxes (including deductible interest and taxes of a tenant-stockholder in a cooperative housing corporation);

• The cost of buying property, including principal payments on a mortgage;

• The cost of domestic labor (maids, gardeners, etc.);

• Pay television subscriptions;

• Improvements and other expenses that increase the 

value or appreciably prolong the life of property;

• Purchased furniture or accessories; or

• Depreciation or amortization of property or improvements.

No double benefit. You can’t include in housing 

expenses the value of meals or lodging that you 

exclude from gross income (see Exclusion of 

Meals and Lodging, earlier).

Limit on housing expenses. The amount of qualified 

housing expenses eligible for the housing exclusion and 

housing deduction is limited. The limit is generally 30% of 

the maximum foreign earned income exclusion (computed 

on a daily basis), multiplied by the number of days in your 

qualifying period that fall within your tax year. For 2023, 

this is generally $98.63 per day ($36,000 per year). However, the limit will vary depending upon the location of your 

foreign tax home.

A qualified individual incurring housing expenses in a 

high-cost locality during 2023 can use housing expenses 

that total more than the standard limit on housing expenses ($36,000) to determine the housing amount. An individual who does not incur housing expenses in a high-cost 

locality is limited to maximum housing expenses of $98.63 

per day ($36,000 per year).

The limits for high-cost localities are listed in the 

Instructions for Form 2555.

You can elect to apply the 2023 housing cost limits to figure your 2022 housing exclusion instead 

of using the 2022 limits. The IRS and Treasury anticipate that you will be able to elect to apply the 2024 limits to figure your 2023 housing exclusion instead of using 

the 2023 limits.

Second foreign household. Ordinarily, if you maintain two foreign households, your reasonable foreign 

housing expenses include only costs for the household 

that bears the closer relationship (not necessarily geographic) to your tax home. However, if you maintain a second, separate household outside the United States for 

your spouse or dependents because living conditions 

near your tax home are dangerous, unhealthful, or otherwise adverse, include the expenses for the second household in your reasonable foreign housing expenses. You 

can’t include expenses for more than one second foreign 

household at the same time.

If you maintain two households and you exclude the 

value of one because it is provided by your employer, you 

can still include the expenses for the second household in 

figuring a foreign housing exclusion or deduction.

Adverse living conditions include:

• A state of warfare or civil insurrection in the general 

area of your tax home, and

CAUTION

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TIP

Publication 54 (2023) Chapter 4 Foreign Earned Income and Housing: 

Exclusion – Deduction

29
• Conditions under which it is not feasible to provide 

family housing (for example, if you must live on a construction site or drilling rig).

Foreign Housing Exclusion

If you do not have self-employment income, all of your 

earnings are employer-provided amounts and your entire 

housing amount is considered paid for with those employer-provided amounts. This means that you can exclude (up to the limits) your entire housing amount.

Employer-provided amounts. These include any 

amounts paid to you or paid or incurred on your behalf by 

your employer that are taxable foreign earned income 

(without regard to the foreign earned income exclusion) to 

you for the year. Employer-provided amounts include:

• Your salary,

• Any reimbursement for housing expenses,

• Amounts your employer pays to a third party on your 

behalf,

• The fair rental value of company-owned housing furnished to you unless that value is excluded under the 

rules explained earlier under Exclusion of Meals and 

Lodging,

• Amounts paid to you by your employer as part of a tax 

equalization plan, and

• Amounts paid to you or a third party by your employer 

for the education of your dependents.

Choosing the exclusion. You can choose the housing 

exclusion by completing the appropriate parts of Form 

2555. Rules about choosing the exclusion under Foreign 

Earned Income Exclusion, earlier, also apply to the foreign 

housing exclusion.

Your housing exclusion is the lesser of:

• That part of your housing amount paid for with employer-provided amounts, or

• Your foreign earned income.

If you choose the housing exclusion, you must figure it before figuring your foreign earned income exclusion. You 

cannot claim less than the full amount of the housing exclusion to which you are entitled. 

Figuring tax on income not excluded. If you claim 

the housing exclusion, the foreign earned income exclusion (discussed earlier), or both, you must figure the tax 

on your nonexcluded income using the tax rates that 

would have applied had you not claimed the exclusions. 

See the Instructions for Form 1040 and complete the Foreign Earned Income Tax Worksheet to figure the amount 

of tax to enter on Form 1040 or 1040-SR, line 16. If you 

must attach Form 6251 to your return, use the Foreign 

Earned Income Tax Worksheet provided in the Instructions 

for Form 6251.

Foreign tax credit or deduction. Once you choose to 

exclude foreign housing amounts, you can’t take a foreign 

tax credit or deduction for taxes on income you can exclude. If you do take a credit or deduction for any of those 

taxes, your choice to exclude housing amounts may be 

considered revoked. See Pub. 514 for more information.

Additional child tax credit. You can’t take the additional 

child tax credit if you claim the foreign housing exclusion.

Earned income credit. If you claim the foreign housing 

exclusion, you don’t qualify for the earned income credit 

for the year.

Foreign Housing Deduction

If you don’t have self-employment income, you can’t take a 

foreign housing deduction.

How you figure your housing deduction depends on 

whether you have only self-employment income or both 

self-employment income and employer-provided income. 

In either case, the amount you can deduct is subject to the 

limit described later.

Self-employed, no employer-provided amounts. If 

none of your housing amount is considered paid for with 

employer-provided amounts, such as when all of your income is from self-employment, you can deduct your housing amount, subject to the limit described later.

Take the deduction by including it on line 24j of Schedule 1 (Form 1040).

Self-employed and employer-provided amounts. If 

you are both an employee and a self-employed individual 

during the year, you can deduct part of your housing 

amount and exclude part of it. To find the part that you can 

exclude, multiply your housing amount by the employer-provided amounts (discussed earlier) and then divide the result by your foreign earned income. This is the 

amount you can use to figure your foreign housing exclusion. You can deduct the balance of the housing amount, 

subject to the limit described later.

Example. Your housing amount for the year is 

$18,000. During the year, your total foreign earned income 

is $100,000, of which half ($50,000) is from self-employment and half is from your services as an employee. Half 

of your housing amount ($18,000 ÷ 2) is considered provided by your employer. You can exclude $9,000 as a housing exclusion. You can deduct the remaining $9,000 as a 

housing deduction subject to the following limit.

Limit

Your housing deduction cannot be more than your foreign 

earned income minus the total of:

• Your foreign earned income exclusion, plus

• Your housing exclusion.

Carryover. You can carry over to the next year any part of 

your housing deduction that is not allowed because of the 

limit. You are allowed to carry over your excess housing 

deduction to the next year only. If you can’t deduct it in the 

next year, you can’t carry it over to any other year. You 

30 Chapter 4 Foreign Earned Income and Housing: 

Exclusion – Deduction

Publication 54 (2023)
deduct the carryover in figuring adjusted gross income. 

The amount of carryover you can deduct is limited to your 

foreign earned income for the year of the carryover minus 

the total of your foreign earned income exclusion, housing 

exclusion, and housing deduction for that year.

Additional child tax credit. You can’t take the additional 

child tax credit if you claim the foreign housing deduction.

Married Couples

If both you and your spouse qualify for the foreign housing 

exclusion or the foreign housing deduction, how you figure 

the benefits depends on whether you maintain separate 

households.

Separate Households

If you and your spouse live apart and maintain separate 

households, you both may be able to claim the foreign 

housing exclusion or the foreign housing deduction. You 

both can claim the exclusion or the deduction if both of the 

following conditions are met.

• You and your spouse have different tax homes that 

aren’t within reasonable commuting distance of each 

other.

• Neither spouse's residence is within reasonable commuting distance of the other spouse's tax home.

Housing exclusion. Each spouse claiming a housing 

exclusion must figure separately the part of the housing 

amount that is attributable to employer-provided amounts, 

based on the separate foreign earned income.

One Household

If you and your spouse lived in the same foreign household and file a joint return, you must figure your housing 

amounts jointly. If you file separate returns, only one 

spouse can claim the housing exclusion or deduction.

In figuring your housing amount jointly, you can combine your housing expenses and figure one base housing 

amount. Either spouse (but not both) can claim the housing exclusion or housing deduction. However, if you and 

your spouse have different periods of residence or presence and the one with the shorter period of residence or 

presence claims the exclusion or deduction, you can claim 

as housing expenses only the expenses for that shorter 

period.

Example. Tom and Jane live together and file a joint 

return. Tom was a bona fide resident of and had his tax 

home in Ghana from August 17, 2023, through December 

31, 2024. Jane was a bona fide resident of and had her 

tax home in Ghana from September 15, 2023, through December 31, 2024.

During 2023, Tom received $75,000 of foreign earned 

income and Jane received $50,000 of foreign earned income. Tom paid $10,000 for housing expenses, of which 

$7,500 was for expenses incurred from September 15 

through the end of the year. Jane paid $3,000 for housing 

expenses in 2023, all of which were incurred during her 

period of residence in Ghana.

Tom and Jane figure their housing amount jointly. If Tom 

claims the housing exclusion, their housing expenses 

would be $13,000 ($10,000 + $3,000) and their base 

housing amount, using Tom's 2023 period of residence 

(August 17–December 31, 2023), would be $7,754 

($56.60 × 137 days). Tom's housing amount would be 

$5,246 ($13,000 – $7,754). If, instead, Jane claims the 

housing exclusion, their housing expenses would be limited to $10,500 ($7,500 + $3,000) and their base housing 

amount, using Jane's period of residence (September 15–

December 31, 2023), would be $6,113 ($56.60 × 108 

days). Jane's housing amount would be $4,387 ($10,500 

– $6,113).

Form 2555

Use Form 2555 to claim the foreign earned income exclusion. You must file Form 2555 each year you are claiming 

the exclusion.

Also, use Form 2555 to claim either the foreign housing 

exclusion or the foreign housing deduction. Form 2555 

shows how you meet the bona fide residence test or physical presence test, how much of your earned income is excluded, and how to figure the amount of your allowable 

housing exclusion or deduction.

Note. Don’t submit Form 2555 by itself.

If you are a U.S. citizen or resident alien who is a citizen 

or national of a U.S. treaty country, you can claim the exclusion under the bona fide residence test. You should fill 

out Parts I, II, IV, and V of Form 2555. In filling out Part II, 

be sure to give your visa type and the period of your bona 

fide residence. Frequently, these items are overlooked.

U.S. citizens and all resident aliens can claim the exclusion under the physical presence test. You should fill out 

Parts I, III, IV, and V of Form 2555. When filling out Part III, 

be sure to insert the beginning and ending dates of your 

12-month period and the dates of your arrivals and departures, as requested in the travel schedule.

You must fill out Part VI if you are claiming a foreign 

housing exclusion or deduction.

If you are claiming the foreign earned income exclusion, 

fill out Part VII.

If you are claiming the foreign earned income exclusion, 

the foreign housing exclusion, or both, fill out Part VIII.

Finally, fill out Part IX if you are claiming the foreign 

housing deduction.

If you and your spouse both qualify to claim the foreign 

earned income exclusion, the foreign housing exclusion, 

or the foreign housing deduction, you and your spouse 

must file separate Forms 2555 to claim these benefits. 

See the discussion earlier under Separate Households.

Publication 54 (2023) Chapter 4 Foreign Earned Income and Housing: 

Exclusion – Deduction

31
5.

Deductions and Credits

Topics

This chapter discusses:

• The rules concerning items related to excluded 

income,

• Contributions to foreign charitable organizations,

• Contributions to individual retirement arrangements 

(IRAs),

• Taxes of foreign countries and U.S. territories, and

• How to report deductions.

Useful Items

You may want to see:

Publication

Dependents, Standard Deduction, and Filing 

Information

Foreign Tax Credit for Individuals

Selling Your Home

Contributions to Individual Retirement 

Arrangements (IRAs)

Information on the United States–Canada 

Income Tax Treaty

Form (and Instructions)

Foreign Tax Credit

Employee Business Expenses

Foreign Earned Income

cdu(o) Itemized Deductions

Shele C (Frm 1040) Profit or Loss From 

Business

SS- Application for a Social Security Card

W-7 Application for IRS Individual Taxpayer 

Identification Number

See chapter 7 for information about getting these publications and forms.

Items Related to Excluded 

Income

U.S. citizens and resident aliens living outside the United 

States are generally allowed the same deductions as citizens and residents living in the United States.

 501

 514

 523

 590-A

 597

 1116

 2106

 2555

 Schedule A (Form 1040)

 Schedule C (Form 1040)

 SS-5

 W-7

If you choose to exclude foreign earned income or 

housing amounts, you cannot deduct, exclude, or claim a 

credit for any item that can be allocated to or charged 

against the excluded amounts. This includes any expenses, losses, and other normally deductible items that are 

allocable to the excluded income. You can deduct only 

those expenses connected with earning includible income.

These rules apply only to items definitely related to the 

excluded earned income and they do not apply to other 

items that aren’t definitely related to any particular type of 

gross income. These rules don’t apply to items such as:

• Qualified retirement contributions,

• Alimony payments,

• Charitable contributions,

• Medical expenses,

• Mortgage interest, or

• Real estate taxes on your personal residence.

For purposes of these rules, your housing deduction 

isn’t treated as allocable to your excluded income, but the 

deduction for self-employment tax is.

If you receive foreign earned income in a tax year after 

the year in which you earned it, you may have to file an 

amended return for the earlier year to properly adjust the 

amounts of deductions, credits, or exclusions allocable to 

your foreign earned income and housing exclusions.

Example. In 2022, you had $95,600 of foreign earned 

income and $9,500 of deductions allocable to your foreign 

earned income. You did not have a housing exclusion. Because you excluded all of your foreign earned income, you 

would not have been able to claim any of the deductions 

on your 2022 return.

In 2023, you received a $18,000 bonus for work you did 

abroad in 2022. You can exclude $16,400 of the bonus because the limit on the foreign earned income exclusion for 

2022 was $112,000 and you have already excluded 

$95,600. Since you must include $1,600 of the bonus 

($18,000 − $16,400) for work you did in 2022 in income, 

you can file an amended return for 2021 to claim $133.80 

($9,500 x $1,600/$113,600) of the deductions. These are 

the deductions allocable to the foreign earned income 

($9,500) multiplied by the includible portion of the foreign 

earned income ($1,600) and divided by the total foreign 

earned income for 2022 ($113,600).

Contributions to Foreign 

Charitable Organizations

If you make contributions directly to a foreign church or 

other foreign charitable organization, you generally cannot 

deduct them. Exceptions are explained under Canadian, 

Mexican, and Israeli charities, later.

You can deduct contributions to a U.S. organization that 

transfers funds to a charitable foreign organization if the 

32 Chapter 5 Deductions and Credits Publication 54 (2023)
U.S. organization controls the use of the funds by the foreign organization or if the foreign organization is just an 

administrative arm of the U.S. organization.

Canadian, Mexican, and Israeli charities. Under the income tax treaties with Canada, Mexico, and Israel, you 

may be able to deduct contributions to certain Canadian, 

Mexican, and Israeli charitable organizations. Generally, 

you must have income from sources in Canada, Mexico, 

or Israel, and the organization must meet certain requirements. See Pub. 597 and Pub. 526, Charitable Contributions, for more information.

Contributions to Individual 

Retirement Arrangements

Contributions to your individual retirement arrangements 

(IRAs) that are traditional IRAs or Roth IRAs are generally 

limited to the lesser of $6,500 ($7,500 if 50 or older) or 

your compensation that is includible in your gross income 

for the tax year. In determining compensation for this purpose, don’t take into account amounts you exclude under 

either the foreign earned income exclusion or the foreign 

housing exclusion. Don’t reduce your compensation by 

the foreign housing deduction.

If you are covered by an employer retirement plan at 

work, your deduction for your contributions to your traditional IRAs is generally limited based on your modified adjusted gross income. This is your adjusted gross income 

figured without taking into account the foreign earned income exclusion, the foreign housing exclusion, or the foreign housing deduction. Other modifications are also required. For more information on contributions to IRAs, see 

Pub. 590-A.

Taxes of Foreign Countries and 

U.S. Territories

You can take either a credit or a deduction for income 

taxes paid to a foreign country or a U.S. territory. Taken as 

a deduction, foreign income taxes reduce your taxable income. Taken as a credit, foreign income taxes reduce your 

tax liability. You must treat all foreign income taxes the 

same way. If you take a credit for any foreign income 

taxes, you cannot deduct any foreign income taxes. However, you may be able to deduct other foreign taxes. See 

Deduction for Other Foreign Taxes, later.

There is no rule to determine whether it is to your advantage to take a deduction or a credit for foreign income 

taxes. In most cases, it is to your advantage to take foreign 

income taxes as a tax credit, which you subtract directly 

from your U.S. tax liability, rather than as a deduction in 

figuring taxable income. However, if foreign income taxes 

were imposed at a high rate and the proportion of foreign 

income to U.S. income is small, a lower final tax may result 

from deducting the foreign income taxes. In any event, you 

should figure your tax liability both ways and then use the 

one that is better for you.

You can make or change your choice within 10 years 

from the due date for filing the tax return on which you are 

entitled to take either the deduction or the credit.

Foreign income taxes. These are generally income 

taxes you pay to any foreign country or U.S. territory.

Foreign income taxes on U.S. return. Foreign income 

taxes can only be taken as a credit on Schedule 3 (Form 

1040), line 1, or as an itemized deduction on Schedule A 

(Form 1040). These amounts cannot be included as withheld income taxes on Form 1040 or 1040-SR, line 25.

Foreign taxes paid on excluded income. You cannot 

take a credit or deduction for foreign income taxes paid on 

earnings you exclude from tax under any of the following.

• Foreign earned income exclusion.

• Foreign housing exclusion.

• Territory exclusion.

If your wages are completely excluded, you can’t deduct 

or take a credit for any of the foreign taxes paid on your 

wages.

If only part of your wages is excluded, you can’t deduct 

or take a credit for the foreign income taxes allocable to 

the excluded part. You find the taxes allocable to your excluded wages by applying a fraction to the foreign taxes 

paid on foreign earned income received during the tax 

year. The numerator (top number) of the fraction is your 

excluded foreign earned income received during the tax 

year minus deductible expenses allocable to that income 

(not including the foreign housing deduction). The denominator (bottom number) of the fraction is your total foreign 

earned income received during the tax year minus all deductible expenses allocable to that income (including the 

foreign housing deduction).

If foreign law taxes both earned income and some other 

type of income and the taxes on the other type can’t be 

separated, the denominator of the fraction is the total 

amount of income subject to foreign tax minus deductible 

expenses allocable to that income.

If you take a foreign tax credit for tax on income 

you could have excluded under your choice to exclude foreign earned income or your choice to exclude foreign housing costs, one or both of the choices 

may be considered revoked.

Credit for Foreign Income Taxes

If you take the foreign tax credit, you may have to file Form 

1116 with Form 1040 or 1040-SR. Form 1116 is used to 

figure the amount of foreign tax paid or accrued that can 

be claimed as a foreign tax credit. Don’t include the 

amount of foreign tax paid or accrued as withheld federal 

income taxes on Form 1040 or 1040-SR, line 25.

The foreign income tax for which you can claim a credit 

is the amount of legal and actual tax liability you pay or 

CAUTION

!

Publication 54 (2023) Chapter 5 Deductions and Credits 33
accrue during the year. The amount for which you can 

claim a credit is not necessarily the amount withheld by 

the foreign country. You can’t take a foreign tax credit for 

income tax you paid to a foreign country that would be refunded by the foreign country if you made a claim for refund.

Subsidies. If a foreign country returns your foreign tax 

payments to you in the form of a subsidy, you cannot claim 

a foreign tax credit based on these payments. This rule 

applies to a subsidy provided by any means that is determined, directly or indirectly, by reference to the amount of 

tax, or to the base used to figure the tax.

Some ways of providing a subsidy are refunds, credits, 

deductions, payments, or discharges of obligations. A 

credit is also not allowed if the subsidy is given to a person 

related to you, or persons who participated in a transaction or a related transaction with you.

Limit

The foreign tax credit is limited to the part of your total U.S. 

tax that is in proportion to your taxable income from sources outside the United States compared to your total taxable income. The allowable foreign tax credit can’t be more 

than your actual foreign tax liability.

Exemption from limit. You won’t be subject to this limit 

and won’t have to file Form 1116 if you meet all three of 

the following requirements.

• Your only foreign source income for the year is passive 

income (dividends, interest, royalties, etc.) that is reported to you on a payee statement (such as a Form 

1099-DIV or 1099-INT).

• Your foreign taxes for the year that qualify for the credit 

are not more than $300 ($600 if you are filing a joint 

return) and are reported on a payee statement.

• You elect this procedure.

If you make this election, you can’t carry back or carry 

over any unused foreign tax to or from this year.

Separate limit. You must figure the limit on a separate 

basis with regard to “section 951A category income,” “foreign branch category income,” “passive category income,” 

“general category income,” “section 901(j) income,” “certain income re-sourced by treaty,” and any “lump-sum distributions” from an employer benefit plan for which the 

special averaging treatment is used to determine your tax 

(see the Instructions for Form 1116).

Figuring the limit. In figuring taxable income in each 

category, you take into account only the amount that you 

must include in income on your federal tax return. Don’t 

take any excluded amount into account.

To determine your taxable income in each category, deduct expenses and losses that are definitely related to that 

income.

Other expenses (such as itemized deductions or the 

standard deduction) not definitely related to specific items 

of income must be apportioned to the foreign income in 

each category by multiplying them by a fraction. The numerator (top number) of the fraction is your gross foreign 

income in the separate limit category. The denominator 

(bottom number) of the fraction is your gross income from 

all sources. For this purpose, gross income includes income that is excluded under the foreign earned income 

provisions but does not include any other exempt income. 

You must use special rules for deducting interest expenses. For more information on allocating and apportioning 

your deductions, see Pub. 514.

Recapture of foreign losses. If you have an overall foreign loss and the loss reduces your U.S. source income 

(resulting in a reduction of your U.S. tax liability with respect to U.S. source income), you must recapture the loss 

in later years when you have taxable income from foreign 

sources. This is done by treating a part of your taxable income from foreign sources in later years as U.S. source 

income. This reduces the numerator of the limiting fraction 

and the resulting foreign tax credit limit.

Recapture of domestic losses. If you have an overall 

domestic loss and the loss reduces your foreign source income (resulting in a reduction in the amount of foreign tax 

credit you can claim for taxes paid during that year), you 

must recapture the loss in later years when you have U.S. 

source taxable income. This is done by treating a part of 

your taxable income from U.S. sources in later years as 

foreign source income. This increases the numerator of 

the limitation fraction and the resulting foreign tax credit 

limit.

Foreign tax credit carryback and carryover. The 

amount of foreign income tax not allowed as a credit because of the limit can be carried back 1 year and carried 

forward 10 years.

The Schedule B (Form 1116) is used to reconcile your 

prior year foreign tax carryover with your current year foreign tax carryover. The schedule replaces the previous attachment requirement for Part III, line 10 (Form 1116). For 

more information, see the Instructions for Schedule B 

(Form 1116) and the instructions for Form 1116, line 10, at 

IRS.gov/Form1116.

Deduction for Foreign Income Taxes

Instead of taking the foreign tax credit, you can deduct foreign income taxes as an itemized deduction on Schedule 

A (Form 1040).

You deduct only foreign income taxes paid on income 

that is subject to U.S. tax. You can’t deduct foreign taxes 

paid on earnings you exclude from tax under any of the 

following.

• Foreign earned income exclusion.

• Foreign housing exclusion.

• Territory exclusion.

Example. You are a U.S. citizen and qualify to exclude 

your foreign earned income. Your excluded wages in 

Country X are $70,000 on which you paid income tax of 

34 Chapter 5 Deductions and Credits Publication 54 (2023)
$10,000. You received dividends from Country X of 

$2,000 on which you paid income tax of $600.

You can deduct the $600 tax payment because the dividends relating to it are subject to U.S. tax. Because you 

exclude your wages, you cannot deduct the income tax of 

$10,000.

If you exclude only a part of your wages, see the earlier 

discussion under Foreign taxes paid on excluded income.

Deduction for Other Foreign Taxes

You cannot deduct other foreign taxes, such as real property or personal property taxes, unless you incurred the 

expenses in a trade or business or in the production of income.

On the other hand, you can generally deduct real property or personal property taxes when you pay them to U.S. 

territories. But if you claim the territory exclusion, see Pub. 

570.

The deduction for foreign taxes other than foreign income taxes isn’t related to the foreign tax credit. You can 

take deductions for these miscellaneous foreign taxes and 

also claim the foreign tax credit for income taxes imposed 

by a foreign country.

How To Report Deductions

If you exclude foreign earned income or housing amounts, 

how you show your deductions on your tax return and how 

you figure the amount allocable to your excluded income 

depend on whether the expenses are used in figuring adjusted gross income (Form 1040 or 1040-SR, line 11) or 

are itemized deductions.

If you have deductions used in figuring adjusted gross 

income, enter the total amount for each of these items on 

the appropriate lines and schedules of Form 1040 or 

1040-SR. Generally, you figure the amount of a deduction 

related to the excluded income by multiplying the deduction by a fraction, the numerator of which is your foreign 

earned income exclusion and the denominator of which is 

your foreign earned income. Enter the amount of the deduction(s) related to excluded income on line 44 of Form 

2555.

If you have itemized deductions related to excluded income, enter on Schedule A (Form 1040) only the part not 

related to excluded income. You figure that amount by 

subtracting from the total deduction the amount related to 

excluded income. Generally, you figure the amount that is 

related to the excluded income by multiplying the total deduction by a fraction, the numerator of which is your foreign earned income exclusion and the denominator of 

which is your foreign earned income. Attach a statement 

to your return showing how you figured the deductible 

amount.

Example 1. You are a U.S. citizen employed as an accountant. Your tax home is in Germany for the entire tax 

year. You meet the physical presence test. Your foreign 

earned income for the year was $129,875 and your investment income was $8,890. After excluding $120,000, your 

adjusted gross income is $18,765.

Generally, mortgage interest is deductible on Schedule A (Form 1040). You paid mortgage interest on your foreign home of $15,000. Your mortgage is under $750,000. 

Reduce the $15,000 of your mortgage interest by 92.3% 

(0.923) ($13,845) because you excluded 92.3% (0.923) 

($120,000/$129,875) of your foreign earned income.

The remaining mortgage interest of $1,155 can be deducted on line 8a or 8b of Schedule A (Form 1040).

Example 2. You are a U.S. citizen, have a tax home in 

Spain, and meet the physical presence test. You are 

self-employed and personal services produce the business income. Your gross income was $121,842, business 

expenses were $67,695, and net income (profit) was 

$54,147. You choose the foreign earned income exclusion 

and exclude $120,000 of your gross income. Since your 

excluded income is 98.48% (0.9848) of your total income, 

98.48% (0.9848) of your business expenses are not deductible. Report your total income and expenses on 

Schedule C (Form 1040). On Form 2555, you will show 

the following.

• Line 20a, $121,842, gross income.

• Lines 42 and 43, $120,000, foreign earned income exclusion.

• Line 44, $66,666 (98.48% (0.9848) × $67,695), business expenses attributable to the exclusion.

Example 3. Assume in Example 2 that both capital 

and personal services combine to produce the business 

income. No more than 30% of your net income or $16,244 

($54,147 x 30% (0.30)), assuming that this amount is a 

reasonable allowance for your services, is considered 

earned and can be excluded. Your exclusion of $16,244 is 

13.33% of your gross income ($16,244 ÷ $121,842). Because you excluded 13.33% of your net income, $9,024 

(13.33% (0.1333) x $67,695) of your business expenses 

is attributable to the excluded income and is not deductible.

Example 4. You are a U.S. citizen, have a tax home in 

Brazil, and meet the physical presence test. You are 

self-employed and both capital and personal services 

combine to produce business income. Your gross income 

was $146,000, business expenses were $172,000, and 

your net loss was $26,000. A reasonable allowance for the 

services you performed for the business is $77,000. Because you incurred a net loss, the earned income limit of 

30% of your net profit does not apply. The $77,000 is foreign earned income. If you choose to exclude the 

$77,000, you exclude 52.74% of your gross income 

($77,000 ÷ $146,000), and 52.74% of your business expenses ($90,713) is attributable to that income and is not 

deductible. Show your total income and expenses on 

Schedule C (Form 1040). On Form 2555, exclude $77,000 

and show $90,713 on line 44. Subtract line 44 from 

line 43, and enter the difference as a negative (in parentheses) on line 45. Because this amount is negative, enter 

it as a positive (no parentheses) on line 8d of Schedule 1 

Publication 54 (2023) Chapter 5 Deductions and Credits 35
(Form 1040), and combine it with your other income to arrive at total income on line 9 of Schedule 1 (Form 1040).

In this situation (Example 4), you would probably 

not want to choose the foreign earned income exclusion if this was the first year you were eligible. If 

you had chosen the exclusion in an earlier year, you might 

want to revoke the choice for this year. To do so would 

mean that you could not claim the exclusion again for the 

next 5 tax years without IRS approval. See Choosing the 

Exclusion in chapter 4.

Example 5. You are a U.S. citizen, have a tax home in 

Panama, and meet the bona fide residence test. You have 

been performing services for clients as a partner in a firm 

that provides services exclusively in Panama. Capital investment is not material in producing the partnership's income. Under the terms of the partnership agreement, you 

are to receive 50% of the net profits. The partnership received gross income of $248,000 and incurred operating 

expenses of $102,250. Of the net profits of $145,750, you 

received $72,875 as your distributive share.

You choose to exclude $120,000 of your share of the 

gross income. Because you exclude 96.77% (0.9677) 

($120,000 ÷ $124,000) of your share of the gross income, 

you cannot deduct $49,474, which is 96.77% (0.9677) of 

your share of the operating expenses (96.77% (0.9677) × 

$51,125). Report $72,875, your distributive share of the 

partnership net profit, on Schedule E (Form 1040). On 

Form 2555, show $120,000 on line 42 and show $49,474 

on line 44. Your exclusion on Form 2555 is $70,521.

6.

Tax Treaty Benefits

Topics

This chapter discusses:

• Some common tax treaty benefits,

• How to get help in certain situations, and

• How to get copies of tax treaties.

Useful Items

You may want to see:

Publication

97 Information on the United States–Canada 

Income Tax Treaty

901 U.S. Tax Treaties

See chapter 7 for information about getting these publications.

TIP

 597

 901

Purpose of Tax Treaties

The United States has bilateral income tax treaties, also 

known as conventions, with many countries. See Table 3 

under the list of tax treaty tables at IRS.gov/Individuals/

International-Taxpayers/Tax-Treaty-Tables for a list of countries with which the United States has an income tax treaty 

in effect.

Under these treaties, citizens and residents of the United States who are subject to taxes imposed by the foreign countries are entitled to certain credits, deductions, 

exemptions, and reductions in the rate of taxes of those 

foreign countries. If a foreign country with which the United States has a treaty imposes a tax on you, you may be 

entitled to benefits under the treaty.

Treaty benefits are generally available to residents of 

the United States. They are generally not available to U.S. 

citizens who do not reside in the United States. However, 

certain treaty benefits and safeguards, such as the nondiscrimination provisions, are available to U.S. citizens residing in the treaty countries. U.S. citizens residing in a foreign country may also be entitled to benefits under that 

country's tax treaties with third countries.

Certification of U.S. residency. Use Form 8802 to request certification of U.S. residency for purposes of claiming benefits under a tax treaty. Certification can be requested for the current and any prior calendar years.

You should examine the specific treaty articles to 

find if you are entitled to a tax credit, tax exemption, reduced rate of tax, or other treaty benefit or 

safeguard.

For more information on tax treaties, go to IRS.gov/

Individuals/International-Taxpayers/Tax-Treaties.

Common Benefits

Some common tax treaty benefits are explained below. 

The credits, deductions, exemptions, reductions in rate, 

and other benefits provided by tax treaties are subject to 

conditions and various restrictions. Benefits provided by 

certain treaties are not necessarily provided by others.

Personal service income. If you are a U.S. resident 

who is in a treaty country for a limited number of days in 

the tax year and you meet certain other requirements, the 

payment you receive for personal services performed in 

that country may be exempt from that country's income 

tax.

Professors and teachers. If you are a U.S. resident, 

the payment you receive for the first 2 or 3 years that you 

are teaching or doing research in a treaty country may be 

exempt from that country's income tax.

Students, trainees, and apprentices. If you are a 

U.S. resident, amounts you receive from the United States 

TIP

36 Chapter 6 Tax Treaty Benefits Publication 54 (2023)
for study, research, or business, professional, and technical training in a treaty country may be exempt from a treaty 

country's income tax.

Some treaties exempt non-compensatory grants, allowances, and awards received from governmental and certain nonprofit organizations. Also, under certain circumstances, a limited amount of pay received by students, 

trainees, and apprentices for the performance of services 

in a treaty country may be exempt from the income tax of 

many treaty countries.

Pensions and annuities. If you are a U.S. resident, 

nongovernment pensions and annuities you receive may 

be exempt from the income tax of treaty countries.

Most treaties contain separate provisions for exempting 

government pensions and annuities from treaty country income tax, and some treaties provide exemption from the 

treaty country's income tax for social security payments.

Investment income. If you are a U.S. resident, investment income, such as interest and dividends, that you receive from sources in a treaty country may be exempt from 

that country's income tax or taxed at a reduced rate.

Several treaties provide exemption for capital gains 

(other than from sales of real property in most cases) if 

specified requirements are met.

Tax credit provisions. If you are a U.S. resident who receives income from or owns capital in a foreign country, 

you may be taxed on that income or capital by both the 

United States and the treaty country.

Most treaties allow you to take a credit against or deduction from the treaty country's taxes based on the U.S. 

tax on the income.

Nondiscrimination provisions. Most U.S. tax treaties 

provide that the treaty country cannot discriminate by imposing more burdensome taxes on U.S. citizens who are 

residents of the treaty country than it imposes on its own 

citizens in the same circumstances.

Saving clauses. U.S. treaties contain saving clauses 

that provide that the treaties do not affect the U.S. taxation 

of its own citizens and residents. As a result, U.S. citizens 

and residents cannot generally use the treaty to reduce 

their U.S. tax liability.

However, most treaties provide exceptions to saving 

clauses that allow certain provisions of the treaty to be 

claimed by U.S. citizens or residents. It is important that 

you examine the applicable saving clause to determine if 

an exception applies.

More information on treaties. Pub. 901 contains an explanation of treaty provisions that apply to amounts received by teachers, students, workers, and government 

employees and pensioners who are alien nonresidents or 

residents of the United States. Since treaty provisions are 

generally reciprocal, you can usually substitute “U.S.” for 

the name of the treaty country whenever it appears, and 

vice versa when “U.S.” appears in the treaty exemption 

discussions in Pub. 901.

Pub. 597 contains an explanation of a number of frequently used provisions of the United States–Canada 

income tax treaty.

For additional information, go to IRS.gov/Individuals/

International-Taxpayers/Tax-Treaties.

Competent Authority 

Assistance

If you are a U.S. citizen or resident alien, you can request 

assistance from the U.S. competent authority if you think 

that the actions of the United States, a treaty country, or 

both, cause or will cause a tax situation not intended by 

the treaty between the two countries. You should read any 

treaty articles, including the mutual agreement procedure 

article, that apply in your situation.

The U.S. competent authority cannot consider requests 

involving countries with which the United States does not 

have a tax treaty.

Instructions for how to prepare and submit a request 

are available at IRS.gov/CompetentAuthority.

Your request for competent authority consideration 

should be addressed to:

Commissioner

Large Business and International Division

1111 Constitution Ave. NW

Washington, DC 20224

SE:LB:TTPO:APMA:TAIT:

NCA 570-03

(Attention: TAIT)

Obtaining Copies of Tax 

Treaties

You can get complete information about treaty provisions 

from the taxing authority in the country from which you receive income or from the treaty itself. You can obtain the 

text of most U.S. treaties at IRS.gov/Businesses/

International-Businesses/United-States-Income-TaxTreaties-A-to-Z.

If you have questions about a treaty, you can visit 

IRS.gov/Individuals/International-Taxpayers/Tax-Treaties.

7.

How To Get Tax Help

If you are overseas and need tax help, see Taxpayer Assistance Outside the United States, later.

Publication 54 (2023) Chapter 7 How To Get Tax Help 37
Taxpayer Assistance Inside the 

United States

If you have questions about a tax issue; need help preparing your tax return; or want to download free publications, 

forms, or instructions, go to IRS.gov to find resources that 

can help you right away.

Preparing and filing your tax return. After receiving all 

your wage and earnings statements (Forms W-2, W-2G, 

1099-R, 1099-MISC, 1099-NEC, etc.); unemployment 

compensation statements (by mail or in a digital format) or 

other government payment statements (Form 1099-G); 

and interest, dividend, and retirement statements from 

banks and investment firms (Forms 1099), you have several options to choose from to prepare and file your tax return. You can prepare the tax return yourself, see if you 

qualify for free tax preparation, or hire a tax professional to 

prepare your return.

Free options for tax preparation. Your options for preparing and filing your return online or in your local community, if you qualify, include the following.

• Free File. This program lets you prepare and file your 

federal individual income tax return for free using software or Free File Fillable Forms. However, state tax 

preparation may not be available through Free File. Go 

to IRS.gov/FreeFile to see if you qualify for free online 

federal tax preparation, e-filing, and direct deposit or 

payment options.

• VITA. The Volunteer Income Tax Assistance (VITA) 

program offers free tax help to people with 

low-to-moderate incomes, persons with disabilities, 

and limited-English-speaking taxpayers who need 

help preparing their own tax returns. Go to IRS.gov/

VITA, download the free IRS2Go app, or call 

800-906-9887 for information on free tax return preparation.

• TCE. The Tax Counseling for the Elderly (TCE) program offers free tax help for all taxpayers, particularly 

those who are 60 years of age and older. TCE volunteers specialize in answering questions about pensions and retirement-related issues unique to seniors. 

Go to IRS.gov/TCE or download the free IRS2Go app 

for information on free tax return preparation.

• MilTax. Members of the U.S. Armed Forces and qualified veterans may use MilTax, a free tax service offered by the Department of Defense through Military 

OneSource. For more information, go to 

MilitaryOneSource (MilitaryOneSource.mil/MilTax).

Also, the IRS offers Free Fillable Forms, which can 

be completed online and then e-filed regardless of income.

Using online tools to help prepare your return. Go to 

IRS.gov/Tools for the following.

• The Earned Income Tax Credit Assistant (IRS.gov/

EITCAssistant) determines if you’re eligible for the 

earned income credit (EIC).

• The Online EIN Application (IRS.gov/EIN) helps you 

get an employer identification number (EIN) at no 

cost.

• The Tax Withholding Estimator (IRS.gov/W4App) 

makes it easier for you to estimate the federal income 

tax you want your employer to withhold from your paycheck. This is tax withholding. See how your withholding affects your refund, take-home pay, or tax due.

• The First-Time Homebuyer Credit Account Look-up 

(IRS.gov/HomeBuyer) tool provides information on 

your repayments and account balance.

• The Sales Tax Deduction Calculator (IRS.gov/

SalesTax) figures the amount you can claim if you 

itemize deductions on Schedule A (Form 1040).

Getting answers to your tax questions. On 

IRS.gov, you can get up-to-date information on 

current events and changes in tax law.

• IRS.gov/Help: A variety of tools to help you get answers to some of the most common tax questions.

• IRS.gov/ITA: The Interactive Tax Assistant, a tool that 

will ask you questions and, based on your input, provide answers on a number of tax law topics.

• IRS.gov/Forms: Find forms, instructions, and publications. You will find details on the most recent tax 

changes and interactive links to help you find answers 

to your questions.

• You may also be able to access tax law information in 

your electronic filing software.

Need someone to prepare your tax return? There are 

various types of tax return preparers, including enrolled 

agents, certified public accountants (CPAs), accountants, 

and many others who don’t have professional credentials. 

If you choose to have someone prepare your tax return, 

choose that preparer wisely. A paid tax preparer is:

• Primarily responsible for the overall substantive accuracy of your return,

• Required to sign the return, and

• Required to include their preparer tax identification 

number (PTIN).

Although the tax preparer always signs the return, 

you're ultimately responsible for providing all the 

information required for the preparer to accurately 

prepare your return. Anyone paid to prepare tax returns for 

others should have a thorough understanding of tax matters. For more information on how to choose a tax preparer, go to Tips for Choosing a Tax Preparer on IRS.gov.

CAUTION

!

38 Chapter 7 How To Get Tax Help Publication 54 (2023)
Employers can register to use Business Services Online. The Social Security Administration (SSA) offers online service at SSA.gov/employer for fast, free, and secure 

online W-2 filing options to CPAs, accountants, enrolled 

agents, and individuals who process Form W-2, Wage 

and Tax Statement, and Form W-2c, Corrected Wage and 

Tax Statement.

IRS social media. Go to IRS.gov/SocialMedia to see the 

various social media tools the IRS uses to share the latest 

information on tax changes, scam alerts, initiatives, products, and services. At the IRS, privacy and security are our 

highest priority. We use these tools to share public information with you. Don’t post your social security number 

(SSN) or other confidential information on social media 

sites. Always protect your identity when using any social 

networking site.

The following IRS YouTube channels provide short, informative videos on various tax-related topics in English, 

Spanish, and ASL.

• Youtube.com/irsvideos.

• Youtube.com/irsvideosmultilingua.

• Youtube.com/irsvideosASL.

Watching IRS videos. The IRS Video portal 

(IRSVideos.gov) contains video and audio presentations 

for individuals, small businesses, and tax professionals.

Online tax information in other languages. You can 

find information on IRS.gov/MyLanguage if English isn’t 

your native language.

Free Over-the-Phone Interpreter (OPI) Service. The 

IRS is committed to serving taxpayers with limited-English 

proficiency (LEP) by offering OPI services. The OPI Service is a federally funded program and is available at Taxpayer Assistance Centers (TACs), most IRS offices, and 

every VITA/TCE tax return site. The OPI Service is accessible in more than 350 languages.

Accessibility Helpline available for taxpayers with 

disabilities. Taxpayers who need information about accessibility services can call 833-690-0598. The Accessibility Helpline can answer questions related to current and 

future accessibility products and services available in alternative media formats (for example, braille, large print, 

audio, etc.). The Accessibility Helpline does not have access to your IRS account. For help with tax law, refunds, or 

account-related issues, go to IRS.gov/LetUsHelp.

Note. Form 9000, Alternative Media Preference, or 

Form 9000(SP) allows you to elect to receive certain types 

of written correspondence in the following formats.

• Standard Print.

• Large Print.

• Braille.

• Audio (MP3).

• Plain Text File (TXT).

• Braille Ready File (BRF).

Disasters. Go to IRS.gov/DisasterRelief to review the 

available disaster tax relief.

Getting tax forms and publications. Go to IRS.gov/

Forms to view, download, or print all of the forms, instructions, and publications you may need. Or, you can go to 

IRS.gov/OrderForms to place an order.

Getting tax publications and instructions in eBook 

format. Download and view most tax publications and instructions (including the Instructions for Form 1040) on 

mobile devices as eBooks at IRS.gov/eBooks.

IRS eBooks have been tested using Apple's iBooks for 

iPad. Our eBooks haven’t been tested on other dedicated 

eBook readers, and eBook functionality may not operate 

as intended.

Access your online account (individual taxpayers 

only). Go to IRS.gov/Account to securely access information about your federal tax account.

• View the amount you owe and a breakdown by tax 

year.

• See payment plan details or apply for a new payment 

plan.

• Make a payment or view 5 years of payment history 

and any pending or scheduled payments.

• Access your tax records, including key data from your 

most recent tax return, and transcripts.

• View digital copies of select notices from the IRS.

• Approve or reject authorization requests from tax professionals.

• View your address on file or manage your communication preferences.

Get a transcript of your return. With an online account, you can access a variety of information to help you 

during the filing season. You can get a transcript, review 

your most recently filed tax return, and get your adjusted 

gross income. Create or access your online account at 

IRS.gov/Account.

Tax Pro Account. This tool lets your tax professional 

submit an authorization request to access your individual 

taxpayer IRS online account. For more information, go to 

IRS.gov/TaxProAccount.

Using direct deposit. The safest and easiest way to receive a tax refund is to e-file and choose direct deposit, 

which securely and electronically transfers your refund directly into your financial account. Direct deposit also 

avoids the possibility that your check could be lost, stolen, 

destroyed, or returned undeliverable to the IRS. Eight in 

10 taxpayers use direct deposit to receive their refunds. If 

you don’t have a bank account, go to IRS.gov/

DirectDeposit for more information on where to find a bank 

or credit union that can open an account online.

Publication 54 (2023) Chapter 7 How To Get Tax Help 39
Reporting and resolving your tax-related identity 

theft issues. 

• Tax-related identity theft happens when someone 

steals your personal information to commit tax fraud. 

Your taxes can be affected if your SSN is used to file a 

fraudulent return or to claim a refund or credit.

• The IRS doesn’t initiate contact with taxpayers by 

email, text messages (including shortened links), telephone calls, or social media channels to request or 

verify personal or financial information. This includes 

requests for personal identification numbers (PINs), 

passwords, or similar information for credit cards, 

banks, or other financial accounts.

• Go to IRS.gov/IdentityTheft, the IRS Identity Theft 

Central webpage, for information on identity theft and 

data security protection for taxpayers, tax professionals, and businesses. If your SSN has been lost or 

stolen or you suspect you’re a victim of tax-related 

identity theft, you can learn what steps you should 

take.

• Get an Identity Protection PIN (IP PIN). IP PINs are 

six-digit numbers assigned to taxpayers to help prevent the misuse of their SSNs on fraudulent federal income tax returns. When you have an IP PIN, it prevents someone else from filing a tax return with your 

SSN. To learn more, go to IRS.gov/IPPIN.

Ways to check on the status of your refund. 

• Go to IRS.gov/Refunds.

• Download the official IRS2Go app to your mobile device to check your refund status.

• Call the automated refund hotline at 800-829-1954.

The IRS can’t issue refunds before mid-February 

for returns that claimed the EIC or the additional 

child tax credit (ACTC). This applies to the entire 

refund, not just the portion associated with these credits.

Making a tax payment. Payments of U.S. tax must be 

remitted to the IRS in U.S. dollars. Digital assets are not 

accepted. Go to IRS.gov/Payments for information on how 

to make a payment using any of the following options.

• IRS Direct Pay: Pay your individual tax bill or estimated 

tax payment directly from your checking or savings account at no cost to you.

• Debit Card, Credit Card, or Digital Wallet: Choose an 

approved payment processor to pay online or by 

phone.

• Electronic Funds Withdrawal: Schedule a payment 

when filing your federal taxes using tax return preparation software or through a tax professional.

• Electronic Federal Tax Payment System: Best option 

for businesses. Enrollment is required.

• Check or Money Order: Mail your payment to the address listed on the notice or instructions.

• Cash: You may be able to pay your taxes with cash at 

a participating retail store.

CAUTION

!

• Same-Day Wire: You may be able to do same-day 

wire from your financial institution. Contact your financial institution for availability, cost, and time frames.

Note. The IRS uses the latest encryption technology to 

ensure that the electronic payments you make online, by 

phone, or from a mobile device using the IRS2Go app are 

safe and secure. Paying electronically is quick, easy, and 

faster than mailing in a check or money order.

What if I can’t pay now? Go to IRS.gov/Payments for 

more information about your options.

• Apply for an online payment agreement (IRS.gov/

OPA) to meet your tax obligation in monthly installments if you can’t pay your taxes in full today. Once 

you complete the online process, you will receive immediate notification of whether your agreement has 

been approved.

• Use the Offer in Compromise Pre-Qualifier to see if 

you can settle your tax debt for less than the full 

amount you owe. For more information on the Offer in 

Compromise program, go to IRS.gov/OIC.

Filing an amended return. Go to IRS.gov/Form1040X 

for information and updates.

Checking the status of your amended return. Go to 

IRS.gov/WMAR to track the status of Form 1040-X amended returns.

It can take up to 3 weeks from the date you filed 

your amended return for it to show up in our system, and processing it can take up to 16 weeks.

Understanding an IRS notice or letter you’ve received. Go to IRS.gov/Notices to find additional information about responding to an IRS notice or letter.

Responding to an IRS notice or letter. You can now 

upload responses to all notices and letters using the 

Document Upload Tool. For notices that require additional 

action, taxpayers will be redirected appropriately on 

IRS.gov to take further action. To learn more about the 

tool, go to IRS.gov/Upload.

Note. You can use Schedule LEP (Form 1040), Request for Change in Language Preference, to state a preference to receive notices, letters, or other written communications from the IRS in an alternative language. You may 

not immediately receive written communications in the requested language. The IRS’s commitment to LEP taxpayers is part of a multi-year timeline that is scheduled to begin providing translations in 2023. You will continue to 

receive communications, including notices and letters, in 

English until they are translated to your preferred language.

Contacting your local TAC. Keep in mind, many questions can be answered on IRS.gov without visiting a TAC. 

Go to IRS.gov/LetUsHelp for the topics people ask about 

most. If you still need help, TACs provide tax help when a 

tax issue can’t be handled online or by phone. All TACs 

CAUTION

!

40 Chapter 7 How To Get Tax Help Publication 54 (2023)
now provide service by appointment, so you’ll know in advance that you can get the service you need without long 

wait times. Before you visit, go to IRS.gov/TACLocator to 

find the nearest TAC and to check hours, available services, and appointment options. Or, on the IRS2Go app, 

under the Stay Connected tab, choose the Contact Us option and click on “Local Offices.”

The Taxpayer Advocate Service (TAS) 

Is Here To Help You

What Is TAS?

TAS is an independent organization within the IRS that 

helps taxpayers and protects taxpayer rights. TAS strives 

to ensure that every taxpayer is treated fairly and that you 

know and understand your rights under the Taxpayer Bill 

of Rights.

How Can You Learn About Your Taxpayer 

Rights?

The Taxpayer Bill of Rights describes 10 basic rights that 

all taxpayers have when dealing with the IRS. Go to 

TaxpayerAdvocate.IRS.gov to help you understand what 

these rights mean to you and how they apply. These are 

your rights. Know them. Use them.

What Can TAS Do for You?

TAS can help you resolve problems that you can’t resolve 

with the IRS. And their service is free. If you qualify for 

their assistance, you will be assigned to one advocate 

who will work with you throughout the process and will do 

everything possible to resolve your issue. TAS can help 

you if:

• Your problem is causing financial difficulty for you, 

your family, or your business;

• You face (or your business is facing) an immediate 

threat of adverse action; or

• You’ve tried repeatedly to contact the IRS but no one 

has responded, or the IRS hasn’t responded by the 

date promised.

How Can You Reach TAS?

TAS has offices in every state, the District of Columbia, 

and Puerto Rico. To find your advocate’s number:

• Go to TaxpayerAdvocate.IRS.gov/Contact-Us;

• Download Pub. 1546, The Taxpayer Advocate Service 

Is Your Voice at the IRS, available at IRS.gov/pub/irspdf/p1546.pdf;

• Call the IRS toll free at 800-TAX-FORM 

(800-829-3676) to order a copy of Pub. 1546;

• Check your local directory; or

• Call TAS toll free at 877-777-4778.

How Else Does TAS Help Taxpayers?

TAS works to resolve large-scale problems that affect 

many taxpayers. If you know of one of these broad issues, 

report it to them at IRS.gov/SAMS. Be sure to not include 

any personal taxpayer information.

Low Income Taxpayer Clinics (LITCs)

LITCs are independent from the IRS and TAS. LITCs represent individuals whose income is below a certain level 

and who need to resolve tax problems with the IRS. LITCs 

can represent taxpayers in audits, appeals, and tax collection disputes before the IRS and in court. In addition, 

LITCs can provide information about taxpayer rights and 

responsibilities in different languages for individuals who 

speak English as a second language. Services are offered 

for free or a small fee. For more information or to find an 

LITC near you, go to the LITC page at 

TaxpayerAdvocate.IRS.gov/LITC or see IRS Pub. 4134, 

Low Income Taxpayer Clinic List, at IRS.gov/pub/irs-pdf/

4134.pdf.

Taxpayer Assistance Outside 

the United States

If you are outside the United States, you can call 

267-941-1000 (English-speaking only). This number is not toll free.

Fax 681-247-3101 (for international tax account 

issues only).

If you wish to write instead of calling, please address your letter to:

Internal Revenue Service

International Accounts

Philadelphia, PA 19255-0725

U.S.A.

Additional contacts for taxpayers who live outside the United States are available at IRS.gov/uac/Contact-My-LocalOffice-Internationally.

Taxpayer Advocate Service (TAS). If you live outside 

the United States, you can call TAS at +15.15.56.46.827. 

Your call will be automatically routed to Hawaii or Puerto 

Rico depending on your location. If you select Spanish, 

your call will be routed to the Puerto Rico office for assistance. You can contact TAS at:

Internal Revenue Service

Taxpayer Advocate Service

City View Plaza, 48 Carr 165, 5th floor, Suite 200,

Guaynabo, P.R. 00968-8000

Publication 54 (2023) Chapter 7 How To Get Tax Help 41
You can call TAS toll free at 877-777-4778. For 

more information on TAS and contacts if you are 

outside of the United States, go to 

TaxpayerAdvocate.IRS.gov/Get-Help/International/.

42 Publication 54 (2023)
Questions and Answers

This section answers tax-related questions commonly 

asked by taxpayers living abroad.

Filing Requirements—Where, When, and How

1) When are U.S. income tax returns due?

Generally, for calendar-year taxpayers, U.S. income tax returns are due on April 15. If you are a U.S. citizen or resident and both your tax home and your abode are outside 

the United States and Puerto Rico on the regular due 

date, an automatic extension is granted to June 15 for filing the return. Interest will be charged on any tax due, as 

shown on the return, from April 15.

2) I am going abroad this year and expect to qualify 

for the foreign earned income exclusion. How can I 

secure an extension of time to file my return, when 

should I file my return, and what forms are required?

a) You should file Form 2350 by the due date of your return to request an extension of time to file. Form 2350 is a 

special form for those U.S. citizens or residents abroad 

who expect to qualify for the foreign earned income exclusion or the housing exclusion or deduction under either 

the bona fide residence test or physical presence test and 

would like to have an extension of time to delay filing until 

after they have qualified.

b) If the extension is granted, you should file your return 

after you qualify, but by the approved extension date.

c) You must file your Form 1040 or 1040-SR with Form 

2555.

3) My entire income qualifies for the foreign earned 

income exclusion. Must I file a tax return?

Generally, yes. Every U.S. citizen or resident who receives 

income must file a U.S. income tax return unless total income without regard to the foreign earned income exclusion is below an amount based on filing status. The income levels for filing purposes are discussed under Filing 

Requirements in chapter 1.

4) I was sent abroad by my company in November of 

last year. I plan to secure an extension of time on 

Form 2350 to file my tax return for last year because I 

expect to qualify for the foreign earned income 

exclusion under the physical presence test. However, 

if my company recalls me to the United States before 

the end of the qualifying period and I find I will not 

qualify for the exclusion, how and when should I file 

my return?

If your regular filing date has passed, you should file a return, Form 1040 (Form 1040 or 1040-SR for 2023), as 

soon as possible for last year. Include a statement with 

this return noting that you have returned to the United 

States and won’t qualify for the foreign earned income exclusion. You must report your worldwide income on the return. If you paid a foreign tax on the income earned 

abroad, you may be able to either deduct this tax as an 

itemized deduction or claim it as a credit against your U.S. 

income tax.

However, if you pay the tax due after the regular due 

date, interest will be charged from the regular due date 

until the date the tax is paid.

5) I am a U.S. citizen and have no taxable income 

from the United States, but I have substantial income 

from a foreign source. Am I required to file a U.S. 

income tax return?

Yes. All U.S. citizens and resident aliens are subject to 

U.S. tax on their worldwide income. If you paid taxes to a 

foreign government on income from sources outside the 

United States, you may be able to claim a foreign tax 

credit against your U.S. income tax liability for the foreign 

taxes paid. Form 1116 is used to figure the allowable 

credit.

6) I am a U.S. citizen who has retired, and I expect to 

remain in a foreign country. Do I have any further 

U.S. tax obligations?

Your U.S. tax obligation on your income is the same as 

that of a retired person living in the United States. (See the 

discussion on filing requirements in chapter 1 of this publication.)

7) I have been a bona fide resident of a foreign 

country for over 5 years. Is it necessary for me to pay 

estimated tax?

U.S. taxpayers overseas have the same requirements for 

paying estimated tax as those in the United States. See 

the discussion under Estimated Tax Payments in chapter 1.

Overseas taxpayers should not include in their estimated income any income they receive that is, or will be, exempt from U.S. taxation.

Overseas taxpayers can deduct their estimated housing deduction in figuring their estimated tax.

The first installment of estimated tax is due on April 15 

of the year for which the income is earned.

8) Will a check payable in foreign currency be 

acceptable in payment of my U.S. tax?

Generally, only U.S. currency is acceptable for payment of 

income tax. However, if you are a Fulbright grantee, see 

Fulbright Grant in chapter 1.

Publication 54 (2023) 43
9) I have met the test for physical presence in a 

foreign country and am filing returns for 2 years. 

Must I file a separate Form 2555 with each return?

Yes. A Form 2555 must be filed with each Form 1040 or 

1040-SR tax return on which the benefits of income 

earned abroad are claimed.

10) Does a Form 2555 with a Schedule C or Form W-2 

attached constitute a return?

No. The Form 2555, Schedule C, and Form W-2 are 

merely attachments and do not relieve you of the requirement to file a Form 1040 or 1040-SR to show the sources 

of income reported and the exclusions or deductions 

claimed.

11) On Form 2350, Application for Extension of Time 

To File U.S. Income Tax Return, I stated that I would 

qualify for the foreign earned income exclusion 

under the physical presence test. If I qualify under 

the bona fide residence test, can I file my return on 

that basis?

Yes. You can claim the foreign earned income exclusion 

and the foreign housing exclusion or deduction under either test as long as you meet the requirements. You are 

not bound by the test indicated in the application for extension of time. You must be sure, however, that you file 

the Form 1040 or 1040-SR by the date approved on Form 

2350, because a return filed after that date may be subject 

to a failure-to-file penalty.

If you will not qualify under the bona fide residence test 

until a date later than the extension granted under the 

physical presence rule, apply for a new extension to a 

date 30 days beyond the date you expect to qualify as a 

bona fide resident.

12) I am a U.S. citizen who worked in the United 

States for 6 months last year. I accepted employment 

overseas in July of last year and expect to qualify for 

the foreign earned income exclusion. Should I file a 

return and pay tax on the income earned in the 

United States during the first 6 months and then, 

when I qualify, file another return covering the last 6 

months of the year?

No. You have the choice of one of the following two methods of filing your return.

a) You can file your return when due under the regular 

filing rules, report all your income without excluding your 

foreign earned income, and pay the tax due. After you 

have qualified for the exclusion, you can file an amended 

return, Form 1040-X, accompanied by Form 2555, for a 

refund of any excess tax paid.

b) You can postpone the filing of your tax return by applying on Form 2350 for an extension of time to file to a 

date 30 days beyond the date you expect to qualify under 

either the bona fide residence test or the physical 

presence test, then file your return reflecting the exclusion 

of foreign earned income. This allows you to file only once 

and saves you from paying the tax and waiting for a refund. However, interest is charged on any tax due on the 

postponed tax return, but interest is not paid on refunds 

paid within 45 days after the return is filed.

13) I am a U.S. citizen. I have lived abroad for a 

number of years and recently realized that I should 

have been filing U.S. income tax returns. How do I 

correct this oversight in not having filed returns for 

these years?

File the late returns as soon as possible, stating your reason for filing late. For advice on filing the returns, you 

should contact an IRS representative.

14) In 2016, I qualified to exclude my foreign earned 

income, but I did not claim this exclusion on the 

return I filed in 2017. I paid all outstanding taxes with 

the return. Can I file a claim for refund now?

It is too late to claim this refund because a claim for refund 

must be filed within 3 years from the date the return was 

filed or 2 years from the date the tax was paid, whichever 

is later. A return filed before the due date is considered 

filed on the due date.

Meeting the Requirements of Either the Bona Fide 

Residence Test or the Physical Presence Test

1) I recently came to Country X to work for the 

Orange Tractor Co. and I expect to be here for 5 or 6 

years. I understand that upon the completion of 1 full 

year I will qualify for an exclusion or deduction under 

the bona fide residence test. Is this correct?

Not necessarily. The law provides that to qualify under this 

test for the foreign earned income exclusion, the foreign 

housing exclusion, or the foreign housing deduction, a 

person must be a bona fide resident of a foreign country 

or countries for an uninterrupted period that includes an 

entire tax year.

If, like most U.S. citizens, you file your return on a calendar-year basis, the tax year referred to in the law would be 

from January 1 to December 31 of any particular year. Unless you established residence in Country X on January 1, 

it would be more than 1 year before you would be a bona 

fide resident of a foreign country. Once you have completed your qualifying period, however, you are entitled to exclude the income or to claim the housing exclusion or deduction from the date you established bona fide 

residence.

2) I understand the physical presence test to be 

simply a matter of being physically present in a 

foreign country for at least 330 days within 12 

consecutive months, but what are the criteria of the 

bona fide residence test?

44 Publication 54 (2023)
To be a bona fide resident of a foreign country, you must 

show that you entered a foreign country intending to remain there for an indefinite or prolonged period and, to 

that end, you are making your home in that country. Consideration is given to the type of quarters occupied, 

whether your family went with you, the type of visa, the 

employment agreement, and any other factor pertinent to 

show whether your stay in the foreign country is indefinite 

or prolonged.

To claim the foreign earned income exclusion or foreign 

housing exclusion or deduction under this test, the period 

of foreign residence must include 1 full tax year (usually 

January 1–December 31), but once you meet this time requirement, you figure the exclusions and the deduction 

from the date the residence actually began.

3) To meet the qualification of “an uninterrupted 

period that includes an entire tax year,” do I have to 

be physically present in a foreign country for the 

entire year?

No. “Uninterrupted” refers to the bona fide residence 

proper and not to the physical presence of the individual. 

During the period of bona fide residence in a foreign country, even during the first full year, you can leave the country 

for brief and temporary trips back to the United States or 

elsewhere for vacation, or even for business. To preserve 

your status as a bona fide resident of a foreign country, 

you must have a clear intention of returning from those 

trips, without unreasonable delay, to your foreign residence.

4) I am a U.S. citizen and during 2022 was a bona fide 

resident of Country X. On January 15, 2023, I was 

notified that I was to be assigned to Country Y. I was 

recalled to New York for 90 days of orientation and 

then went to Country Y, where I have been since. 

Although I was not in Country Y on January 1, I was a 

bona fide resident of Country X and was in Country Y 

on December 31, 2023. My family remained in 

Country X until completion of the orientation period, 

and my household goods were shipped directly to 

my new post. Am I a bona fide resident of a foreign 

country for 2023, or must I wait for the entire year of 

2024 to become one?

Because you did not break your period of foreign residence, you would continue to be a bona fide resident of a 

foreign country for 2023.

5) Due to illness, I returned to the United States 

before I completed my qualifying period to claim the 

foreign earned income exclusion. Can I figure the 

exclusion for the period I resided abroad?

No. You aren’t entitled to any exclusion of foreign earned 

income because you did not complete your qualifying period under either the bona fide residence test or physical 

presence test. If you paid foreign tax on the income 

earned abroad, you may be able to claim that tax as a 

deduction or as a credit against your U.S. tax.

6) Can a resident alien of the United States qualify 

for an exclusion or deduction under the bona fide 

residence test or the physical presence test?

Resident aliens of the United States can qualify for the foreign earned income exclusion, the foreign housing exclusion, or the foreign housing deduction if they meet the requirements of the physical presence test. Resident aliens 

who are citizens or nationals of a country with which the 

United States has an income tax treaty in effect can also 

qualify under the bona fide residence test.

7) On August 13 of last year, I left the United States 

and arrived in Country Z to work for the Gordon 

Manufacturing Company. I expected to be able to 

exclude my foreign earned income under the 

physical presence test because I planned to be in 

Country Z for at least 1 year. However, I was 

reassigned back to the United States and left 

Country Z on July 1 of this year. Can I exclude any of 

my foreign earned income?

No. You can’t exclude any of the income you earned in 

Country Z because you were not in a foreign country for at 

least 330 full days as required under the physical presence test.

Foreign Earned Income

1) I am an employee of the U.S. Government working 

abroad. Can all or part of my government income 

earned abroad qualify for the foreign earned income 

exclusion?

No. The foreign earned income exclusion applies to your 

foreign earned income. Amounts paid by the United 

States or its agencies to their employees aren’t treated, for 

this purpose, as foreign earned income.

2) I qualify for the foreign earned income exclusion 

under the bona fide residence test. Does my foreign 

earned income include my U.S. dividends and the 

interest I receive on a foreign bank account?

No. The only income that is foreign earned income is income from the performance of personal services abroad. 

Investment income isn’t earned income. However, you 

must include it in gross income reported on your Form 

1040 or 1040-SR.

3) My company pays my foreign income tax on my 

foreign earnings. Is this taxable compensation?

Yes. The amount is compensation for services performed. 

The tax paid by your company should be reported on 

Form 1040 or 1040-SR, line 1h, and on Form 2555, Part 

IV, line 22f.

Publication 54 (2023) 45
4) I live in an apartment in a foreign city for which my 

employer pays the rent. Should I include in my 

income the cost to my employer ($1,200 a month) or 

the fair market value of equivalent housing in the 

United States ($800 a month)?

You must include in income the fair market value (FMV) of 

the facility provided, where it is provided. This will usually 

be the rent your employer pays. Situations when the FMV 

is not included in income are discussed in chapter 4 under 

Exclusion of Meals and Lodging.

5) My U.S. employer pays my salary into my U.S. 

bank account. Is this income considered earned in 

the United States or is it considered foreign earned 

income?

If you performed the services to earn this salary outside 

the United States, your salary is considered earned 

abroad. It does not matter that you are paid by a U.S. employer or that your salary is deposited in a U.S. bank account in the United States. The source of salary, wages, 

commissions, and other personal service income is the 

place where you perform the services.

6) What is considered a foreign country?

For the purposes of the foreign earned income exclusion 

and the foreign housing exclusion or deduction, any territory under the sovereignty of a country other than the United States is a foreign country. U.S. territories are not treated as foreign countries.

7) What is the source of earned income?

The source of earned income is the place where the work 

or personal services that produce the income are performed. In other words, income received for work in a foreign country has its source in that country. The foreign 

earned income exclusion and the foreign housing exclusion or deduction are limited to earned income from sources within foreign countries.

Foreign Earned Income Exclusion

1) I qualify for the foreign earned income exclusion 

and earned more than $120,000 during 2023. Am I 

entitled to the maximum $120,000 exclusion?

Not necessarily. Although you qualify for the foreign 

earned income exclusion, you may not have met either the 

bona fide residence test or the physical presence test for 

your entire tax year. If you didn’t meet either of these tests 

for your entire tax year, you must prorate the maximum exclusion based on the number of days that you did meet either test during the year.

2) How do I qualify for the foreign earned income 

exclusion?

To be eligible, you must have a tax home in a foreign 

country and be a U.S. citizen or resident alien. You must 

be either a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax 

year, or you must be physically present in a foreign country or countries for at least 330 full days during any period 

of 12 consecutive months. U.S. citizens may qualify under 

either test. The physical presence test applies to all resident aliens, while the bona fide residence test applies to 

resident aliens who are citizens or nationals of a country 

with which the United States has an income tax treaty in 

effect.

Your tax home must be in the foreign country or countries throughout your period of residence or presence. For 

this purpose, your period of physical presence is the 330 

full days during which you are present in a foreign country, 

not the 12 consecutive months during which those days 

occur.

3) Is it true that my foreign earned income exclusion 

cannot exceed my foreign earned income?

Yes. The amount of the exclusion is limited each year to 

the amount of your foreign earned income after reducing 

that income by the foreign housing exclusion. The foreign 

earned income must be earned during the part of the tax 

year that you have your tax home abroad and meet either 

the bona fide residence test or the physical presence test.

4) My wife and I are both employed, reside together, 

and file a joint return. We meet the qualifications for 

claiming the foreign earned income exclusion. Do we 

each figure a separate foreign earned income 

exclusion and foreign housing exclusion?

You figure your foreign earned income exclusion separately because you both have foreign earned income. The 

amount of the exclusion for each of you can’t exceed your 

separate foreign earned incomes.

You must figure your housing exclusion jointly. See Married Couples in chapter 4 for further details.

Social Security and Railroad Retirement Benefits

1) Are U.S. social security benefits taxable?

Benefits received by U.S. citizens and resident aliens may 

be taxable, depending on the total amount of income and 

the filing status of the taxpayer. Under certain treaties, 

U.S. social security benefits are exempt from U.S. tax if 

taxed by the country of residence.

Benefits similar to social security received from other 

countries by U.S. citizens or residents may be taxable. 

(Refer to U.S. tax treaties with various countries for any 

benefit granted by the treaty.)

2) As a U.S. citizen or resident alien, how do I figure 

the amount of my U.S. social security benefits to 

include in gross income?

46 Publication 54 (2023)
See Pub. 915 to figure if any of your benefits are includible 

in income.

3) How are railroad retirement benefits taxed?

The part of a tier 1 railroad retirement benefit that is equivalent to the social security benefit you would have been 

entitled to receive if the railroad employee's work had 

been covered under the social security system rather than 

the railroad retirement system is treated the same as a social security benefit, discussed above.

The other part of a tier 1 benefit that is not considered a 

social security equivalent benefit is treated like a private 

pension or annuity, as are tier 2 railroad retirement benefits. Pensions and annuities are explained in chapter 4 under Earned and Unearned Income. Vested dual benefits 

and supplemental annuities are also treated like private 

pensions, but are fully taxable.

The proper amounts of the social security equivalent 

part of tier 1 benefits and any special guaranty benefits 

are shown on the Form RRB-1099 that you receive from 

the Railroad Retirement Board. The taxable amounts of 

the non-social security equivalent part of tier 1, tier 2, vested dual benefits, and supplemental annuities are shown 

on the Form RRB-1099-R that you receive from the Railroad Retirement Board.

Social Security Tax and Self-Employment Tax

1) I am a minister with earned income from abroad 

and expect to qualify for the foreign earned income 

exclusion. How do I pay my self-employment tax?

File a Form 1040 or 1040-SR with Schedule SE (Form 

1040) and Form 2555. Figure your self-employment tax on 

Schedule SE (Form 1040) and enter it on Schedule 2 

(Form 1040) as the tax due with the return.

2) Because I expect to qualify for the foreign earned 

income exclusion, I have requested and received an 

extension of time until January 30, 2025, to file my 

2023 return. However, since I will be paying 

self-employment tax on my spouse's income, should 

I file a 2023 return when due, pay the 

self-employment tax, and then file another return 

when I qualify for the exclusion?

No. You don’t need to file a 2023 Form 1040 or 1040-SR 

(the regular income tax return) when due if you have received an extension. Instead, you should pay enough estimated tax to cover the self-employment tax and any income tax that would be due after taking out the amount of 

excludable income.

Income Tax Withholding

1) How can I get my employer to stop withholding 

federal income taxes from wages while I am overseas 

and eligible for the foreign earned income exclusion?

File a statement in duplicate with your employer stating 

that withholding should be reduced because you meet the 

bona fide residence test or physical presence test. Also, 

see the following question.

2) Does the IRS provide forms to be used by 

employees requesting employers to stop withholding 

income tax from wages they expect to be excluded 

as income earned abroad?

Yes. Form 673 is a sample statement that can be used by 

individuals who expect to qualify for the foreign earned income exclusion under the bona fide residence test or the 

physical presence test.

3) I am a U.S. citizen residing overseas, and I receive 

dividend and interest income from U.S. sources from 

which tax is being withheld at a rate of 30%. How can 

I have this situation corrected?

File Form W-9 (indicating that you are a U.S. citizen) with 

the withholding agents who are paying you the dividends 

and interest. This is their authority to stop withholding the 

30% income tax at the source on payments due to you.

4) As a U.S. citizen receiving dividend and interest 

income from the United States from which tax has 

been withheld, do I report the net dividend and 

interest income on my return, or do I report the gross 

amount and take credit for the tax withheld?

You must report the gross amount of the income received 

and take a tax credit for the tax withheld. This is to your 

advantage because the tax withheld is deducted in full 

from the tax due. It is also advisable to attach a statement 

to your return explaining this tax credit so there will be no 

question as to the amount of credit allowable.

Deductions

1) Can I claim a foreign tax credit even though I do 

not itemize deductions?

Yes. You can claim the foreign tax credit even though you 

don’t itemize deductions.

2) I had to pay customs duty on a few things I 

brought back with me from Europe last summer. Can 

I include customs fees with my other deductible 

taxes?

No. Customs duties, like federal excise taxes, aren’t deductible.

3) What types of foreign taxes are deductible?

Generally, foreign income taxes are deductible as itemized 

deductions. Foreign income taxes are deductible only if 

you do not claim the foreign tax credit. Foreign income 

Publication 54 (2023) 47
taxes paid on excluded income aren’t deductible as an 

itemized deduction.

Other foreign taxes, such as real property or personal 

property taxes, are only deductible if you incurred the expenses in a trade or business or in the production of income.

Note. Foreign income taxes are usually claimed under 

the credit provisions, if they apply, because this is more 

advantageous in most cases.

Scholarship and Fellowship Grantees

1) I am a Fulbright grantee. What documentation 

must I attach to my return?

a) There are no special tax forms for Fulbright grantees. 

File on a regular Form 1040 or 1040-SR.

b) If you claim exemption as a scholarship or fellowship 

grantee, submit brochures and correspondence describing the grant and your duties.

c) If you are located in a foreign country and wish to pay 

tax in foreign currency, you should submit a certified statement showing that you were a Fulbright grantee and at 

least 70% of the grant was paid in nonconvertible foreign 

currency.

2) I taught and lectured abroad under taxable grants. 

What expenses can I deduct?

You may be able to deduct your travel, meals, and lodging 

expenses if you are temporarily absent from your regular 

place of employment. For more information about deducting travel, meals, and lodging expenses, see Pub. 463, 

Travel, Gift, and Car Expenses.

General Tax Questions

1) Can IRS personnel recommend tax practitioners 

who prepare returns?

No. IRS employees aren’t permitted to recommend tax 

practitioners who prepare income tax returns.

2) I just filed my return. How do I check the status of 

my refund?

See Refund Information in your tax return instructions.

3) I haven’t received my refund from last year's 

return. Can I claim the credit against this year's tax?

No. That would cause problems to both years' returns. If 

your last year's refund is overdue, call or write the IRS. If 

you write to the IRS, be sure to include your social security 

number (or individual taxpayer identification number) in 

the letter.

4) I forgot to include interest income when I filed my 

return last week. What should I do?

To correct a mistake of this sort, you should prepare Form 

1040-X. Include the omitted interest income, refigure the 

tax, and send the form as soon as possible along with any 

additional tax due to the Internal Revenue Service Center 

where you filed your return. You may also be able to file 

your Form 1040-X electronically.

Use Form 1040-X to correct an individual Form 1040 or 

1040-SR income tax return filed for any year for which the 

period of limitations has not expired (usually 3 years after 

the due date of the return filed, or 2 years after the tax was 

paid, whichever is later).

5) I am a U.S. citizen and, because I expect to qualify 

for the foreign earned income exclusion, all my 

foreign income (which consists solely of salary) will 

be exempt from U.S. tax. Do I get any tax benefit from 

income tax I paid on this salary to a foreign country 

during the tax year?

No. You can’t take either a tax credit or a tax deduction for 

foreign income taxes paid on income that is exempt from 

U.S. tax because of the foreign earned income exclusion.

6) I am a U.S. citizen stationed abroad. I made a 

personal loan to a nonresident alien who later went 

bankrupt. Can I claim a bad debt loss for this 

money?

Yes. The loss should be reported as a short-term capital 

loss on Schedule D (Form 1040). You have the burden of 

proving the validity of the loan, the subsequent bankruptcy, and the recovery or nonrecovery from the loan.

7) With which countries does the United States have 

tax treaties?

Table 3 under the list of tax treaty tables at IRS.gov/

Individuals/International-Taxpayers/Tax-Treaty-Tables lists 

those countries with which the United States has income 

tax treaties.

8) I am a retired U.S. citizen living in Europe. My only 

income is from U.S. sources on which I pay U.S. 

taxes. I am taxed on the same income in the foreign 

country where I reside. How do I avoid double 

taxation?

If you reside in a country that has an income tax treaty 

with the United States, the treaty will generally contain 

provisions to eliminate double taxation. Many treaties will 

provide reduced rates for various types of income. Treaties often provide reciprocal credits in one country for the 

tax paid to the other country. Nontreaty countries, depending on their laws, may give the same type of credit.

If double taxation with a treaty country exists and you 

cannot resolve the problem with the tax authorities of the 

foreign country, you can contact the U.S. competent authority for assistance. See chapter 6 for information on requesting consideration.

48 Publication 54 (2023)
9) My total income after claiming the foreign earned 

income and housing exclusions consists of $5,000 

taxable wages. Am I entitled to claim the earned 

income credit?

No. If you claim the foreign earned income exclusion, the 

foreign housing exclusion, or the foreign housing deduction, you can’t claim the earned income credit.

10) I am claiming the foreign earned income 

exclusion. Can I take the additional child tax credit?

No. You can’t take the additional child tax credit if you 

claim either the foreign earned income or foreign housing 

exclusion, or the foreign housing deduction.

11) Last May, my employer transferred me to our 

office in Puerto Rico. I understand that my salary 

earned in Puerto Rico is tax exempt. Is this correct?

As long as your employer is not the U.S. Government, all 

income from sources within Puerto Rico is exempt from 

U.S. tax if you are a bona fide resident of Puerto Rico during the entire tax year. The income you received from Puerto Rican sources the year you moved to Puerto Rico is 

not exempt. The tax paid to Puerto Rico in the year you 

moved to Puerto Rico can be claimed as a foreign tax 

credit on Form 1116.

12) I am a U.S. citizen married to a nonresident alien. 

Can I qualify to use the head of household tax rates?

Yes. Although your nonresident alien spouse cannot qualify you as a head of household, you may qualify if you 

maintain a household for a qualifying child or other relative.

If your spouse was a nonresident alien at any time during the year and you do not choose to treat your nonresident alien spouse as a resident alien, then you are treated 

as unmarried for head of household purposes. You must 

have another qualifying person and meet the other tests to 

be eligible to file as head of household. You can use the 

head of a household column in the Tax Table or Section D 

of the Tax Computation Worksheet.

It may be advantageous to choose to treat your nonresident alien spouse as a U.S. resident and file a joint income tax return. Once you make the choice, however, you 

must report the worldwide income of both yourself and 

your spouse.

For more information on head of household filing status, get Pub. 501.

Penalties and Interest

1) Does the June 15 extended due date for filing my 

return because both my tax home and my abode are 

outside the United States and Puerto Rico on the 

regular due date relieve me from having to pay 

interest on tax not paid by April 15?

No. An extension, whether an automatic extension or one 

requested in writing, does not relieve you of the payment 

of interest on the tax due as of April 15 following the year 

for which the return is filed. The interest should be included in your payment.

2) If I wait to file my return until I qualify for the 

foreign earned income exclusion, I will be charged 

interest on the U.S. tax I will owe. To avoid being 

charged interest, can I file my return on time, 

reporting only my taxable income, excluding my 

salary for services abroad that will be exempt after I 

have met the qualifications?

No. If you file a return before you qualify for the exclusion, 

you must report all income, including all income for services performed abroad, and pay tax on all of it. After you 

meet the qualifications, you can file a claim for refund by 

excluding the income earned abroad. If you defer the filing 

of your return, you can avoid interest on tax due on your 

return to be filed by paying the tax you estimate you will 

owe with your request for an extension of time to file on 

Form 2350, or by paying enough estimated tax to cover 

any tax that you expect will be due on the return.

Publication 54 (2023) 49
To help us develop a more useful index, please let us know if you have ideas for index entries.

Index See “Comments and Suggestions” in the “Introduction” for the ways you can reach us.

A

Alien:

Resident 2

American Institute in Taiwan, U.S. 

employees of 25

American Samoa, territory 

exclusion 17

Apprentices, treaty benefits for 36

Assistance (See Tax help)

B

Bilateral social security 

agreements 13

Blocked income 6

Bona fide residence test

Defined 18

First year 19

Last year 19

Meeting the requirements 44

Qualifying for 18, 19

Treaty provisions 18

Voting by absentee ballot 19

Waiver of time requirements 20

C

Camps, foreign 25

Carryover of housing deduction 30

Child tax credit 28, 30, 31

Choosing the exclusion 27

Clergy, self-employment tax on 14

Community income 27

Competent authority assistance 37

Contributions:

To foreign charitable 

organizations 32

To IRAs 33

Conventions, income tax 36

Credit

Earned income 28, 30

Foreign tax 11, 33-35

Related to excluded income 32

Currency:

Foreign 6

D

Deductions

Contributions to foreign charitable 

organizations 32

Foreign taxes 33-35, 37, 47

Housing, foreign 30

IRA contributions 33

Related to excluded income 32

Reporting 35

Deposit of foreign currency with 

disbursing officer 7

E

Earned income

Foreign 21, 25, 45

Source of 22

Types of 22-24

Earned income credit 28, 30

Employer-provided amounts 30

Estimated tax 10

Exclusion

Foreign earned income 26, 27

Housing 30

Meals and lodging 25

U.S. territories 17

Extensions

Filing income tax return 5

Meeting bona fide residence or 

physical presence test 6

F

Fellowships 23

Figuring actual tax 7

Figuring estimated tax on 

nonconvertible foreign 

currency 7

Filing information

Estimated tax 10

Filing requirements 4

Nonresident spouse treated as 

resident 9

Filing requirements

By filing status 4

Foreign currency 6

When to file and pay 4, 43

Where to file 8, 43

Foreign

Camps 25

Country, defined 17

Currency 6

Earned income 21-25, 45

Household, second 29

Foreign currency, deposit with 

disbursing officer 7

Foreign earned income

Defined 21-25

U.S. Government employees 24, 25

Foreign earned income exclusion

Choosing 27

Defined 26

Earned income credit 28

Foreign tax credit 28

Income received after year 

earned 26, 27

Limit 26, 27, 46

Maximum exclusion 26, 27

Part-year exclusion 27

Physical presence test, maximum 

exclusion 27

Requirements 15-25

Revoking choice 28

Foreign housing exclusion:

Earned income credit 30

Foreign tax credit 30

Foreign housing exclusion/

deduction

Carryover of deduction 30

Deduction, figuring 30

Exclusion, figuring 30

Housing amount 29

Housing expenses 29

Married couples 31

Requirements 15-25

Second foreign household 29

Foreign tax credit:

Earned income exclusion 28, 30

Foreign taxes

Credit for 11, 33-35

Deduction for 33, 35, 47

Paid on excluded income 33

Form

1040-ES 10

1040-X 6, 9

1116 33

2032 13

2350 6

2555 27, 31

3115 7

4361 14

4563 17

4868 5

673 11

8689 8

W-4 11

Frequently asked questions 

(FAQs) 43-49

Fulbright grant 7, 48

G

General tax questions 48

Green card test 2

Guam:

Residents of 8

Territory exclusion 17

Where to file 8

H

Housing

Amount 29, 30

Deduction 28, 30

Exclusion 28-30

Expenses 29

I

Income

Apprentices, treaty benefits for 36

Artist 23

Blocked 6

50 Publication 54 (2023)
Community 27

Corporation 22

Earned 21-25, 45

Employer's property or facilities, use 

of 23

Investment, treaty benefits for 37

Partnership 22

Pensions and annuities 22, 37

Personal service, treaty benefits 

for 36

Professional fees 23

Professors, treaty benefits for 36

Railroad retirement benefits 46

Reimbursement of employee 

expenses 23

Reimbursement of moving 

expenses 23

Rental 23

Royalties 23

Social security benefits 46

Sole proprietorship 22

Source of 22

Stock options 22

Students, treaty benefits for 36

Teachers, treaty benefits for 36

Trainees, treaty benefits for 36

Unearned 22

Indefinite assignment 16

Individual retirement arrangements 

(IRAs) 33

Investment income, treaty benefits 

for 37

L

Limit on

Foreign housing deduction 30

Housing expenses 29

Income exclusion 26, 27

Lodging, exclusion of 25

M

Married couples 31

Meals and lodging, exclusion of 25

Moving:

Reimbursement of expenses 23

N

Nonresident spouse

Social security number 9

Treated as resident 9

Northern Mariana Islands:

Residents of 9

Territory exclusion 17

Where to file 9

P

Part-year exclusion 27

Pay for personal services 21, 36

Paying U.S. tax in foreign 

currency 7

Payment of tax 4

Penalties and interest 49

Pensions and annuities:

Income from 22, 37

Withholding from 12

Physical presence test

12-month period 20

Defined 19

Maximum exclusion 27

Meeting the requirements 44

Waiver of time requirements 20

Professors, treaty benefits for 36

Publications (See Tax help)

Puerto Rico:

Residents of 18

Territory exclusion

Q

Questions and answers 43-49

R

Railroad retirement benefits 46

Reimbursement:

Accountable plan 23

Employee expenses 23

Moving expenses 23

Resident alien defined 2

Revoking choice to exclude 28

S

Scholarship and fellowship 

grants 48

Scholarships 23

Second foreign household 29, 31

Self-employment tax:

Clergy 14

Exemption from 14

How to pay 47

Who must pay 14

Social security and Medicare 

taxes 12

Social security benefits 46

Social security number:

Nonresident spouse 9

Source of earned income 22

Students, treaty benefits for 36

Substantial presence test 2

T

Taiwan, American Institute in 25

Tax help 38

Tax home 16

Tax treaties:

Benefits of 36, 37

Competent authority assistance 37

Determining residence 18

Obtaining copies of 37

Purpose of 36

Teachers, treaty benefits for 36

Temporary assignment, 

expenses 16

Totalization agreements 13

Trainees, treaty benefits for 36

Travel restrictions 21

Treaties (See Tax treaties)

U

U.S. Government employees 24, 25

U.S. Virgin Islands:

Residents of 18

Territory exclusion 18

V

Virgin Islands:

Nonresidents of 8

Residents of 8

Where to file 8

W

Waiver of time requirements 20

When to file and pay 4, 43

Where to file:

Claiming exclusion/deduction 8

Commonwealth of the Northern 

Mariana Islands residents 9

Guam residents 8

No legal residence in U.S. 8

Virgin Islands residents, 

nonresidents 8

Withholding:

Income tax 11, 47

Pension payments 12

Publication 54 (2023) 51