Does the Foreign Earned Income Exclusion (FEIE) apply to American expats in Qatar?

Absolutely, for American dual nationals living in Qatar, the FEIE presents an opportunity to exclude up to US$126,500 of foreign-earned income from US taxes in 2024, assuming you meet specific eligibility criteria. This tax provision is particularly beneficial for those aiming to mitigate their US tax liabilities while working abroad.

What are the eligibility criteria for the FEIE?

To benefit from the FEIE, you must satisfy either the Physical Presence Test or the Bona Fide Residence Test. The Physical Presence Test requires spending at least 330 full days outside the US over a continuous 12-month period. Flexibility in selecting this 12-month window allows for strategic planning to meet the criterion.

Is it possible to exclude up to US$126,500 of income earned in Qatar?

Yes, provided you qualify under the FEIE through either the residency or presence tests, you’re eligible to exclude from US taxation up to US$126,500 of the income you’ve earned while in Qatar.

What constitutes the 330 days needed for the Physical Presence Test?

For the Physical Presence Test, it’s imperative that you’re physically present in one or more foreign countries for at least 330 full days within a 12-month span. It’s worth noting that this period need not adhere strictly to the calendar year. Only the days spent abroad count, with up to 35 days in the US not affecting your eligibility for the exclusion.

How is the FEIE applied across different tax years?

When utilizing the Physical Presence Test, it’s possible to connect two tax years to accumulate the necessary 330 days. Nevertheless, it’s crucial to understand that the exclusion applies solely to income earned during the tax year for which you’re filing, not across multiple years.

Can expats in Doha also claim the Foreign Housing Exclusion?

Yes, if you are residing in Doha, besides the income exclusion, you might also be eligible for the Foreign Housing Exclusion, which further reduces your taxable income by covering some housing expenses abroad. This addition to the FEIE can significantly increase your savings on US taxes, provided you meet the outlined conditions.

You can learn more about the Doha Foreign Housing Exclusion here.

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