Media type · Earned income, not all income
Foreign income exclusion
A rule that leaves part of foreign earned income out of the home tax base.
Key facts
| Applies to | Earned income, not all income |
|---|---|
| Cap | Set by the country and reviewed |
| Conditions | Residence, work location, period abroad |
| Proration | Partial years often prorated |
| Interaction | Can affect other reliefs |
Exclusion versus credit
An exclusion removes income from the base, so it lowers taxable income before the rate is applied. A credit works later, against the tax that results, and is capped differently.
Choosing between them is not free: taking the exclusion can make other credits unavailable on the same income. The order of the claim is part of the planning.
Frequently asked questions
Is the cap the same every year?
No. It is set nationally and adjusted from time to time, so use the figure for the year being filed.
Does a partial year get the full cap?
Often not. The cap is commonly prorated by the qualifying period, which is what the calculator models.