Question
You recall the basics of the foreign earned income exclusion (FEIE) from your individual tax course. Among other things, you recall that the FEIE is
You recall the basics of the foreign earned income exclusion (FEIE) from your individual tax course. Among other things, you recall that the FEIE is not unlimited - i.e., qualified taxpayers may exclude FEI amounts up to the applic-able annual maximum exclusion, an amount which is adjusted annually for in-flation. On 2022 returns the maximum FEIE is $112,000. On 2023 returns the maximum FEIE will be $120,000.
But what about a married couple where both spouses live and work in a foreign country and they file jointly (MFJ)? Are they each entitled to up to the annual maximum FEIE so that their total exclusion could be up to $240,000 for 2023? Or is the annual maximum really a "per-return" rule, such that only $120,000 will be available on a 2023 MFJ return regardless? Where in the regulations do we find the answer, and what is the answer?
Hint: The subject regulations were promulgated a long time ago. You'll have to read carefully, and the amounts recited in the regulation are way lower than the current FEIE amount - don't be confused by that. Also, ignore references to the "housing cost amount."
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