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Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
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Experience:  15years with H & R Block. Divisional leader, Instructor
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In reading the IRS publication about Foreign Housing Exclusion

Resolved Question:

In reading the IRS publication about Foreign Housing Exclusion or Deduction
http://www.irs.gov/businesses/small/international/article/0,,id=97143,00.html

In the last sentence of the second paragraph it says “The housing deduction applies only to amounts paid for with self-employment earnings.” and does that mean if my earnings are a salary from a corporation, that the housing expense will be”exclusion” instead of a “deduction”. My understanding deductions may lower my tax bracket where exclusion is taking off my income, but I am taxed at the higher bracket. Or does it mean I have to be self-employed to take advantage of taking my housing expenses off my income?

Also can my wife deduct say the maximum allowed which is around $27,000, and in addition can I, even if we live in the same house but we have at least that much housing expenses together and our employer, who we work for the same one, gives us each a housing benefit? I read something about “The spouse claiming the exclusion or deduction can aggregate the housing expenses of both spouses” and I am not sure if that meant we could do this.
Submitted: 4 years ago.
Category: Tax
Expert:  Robin D. replied 4 years ago.

Robin D :

Hello again,
does that mean if my earnings are a salary from a corporation, that the housing expense will be”exclusion” instead of a “deduction”.
Yes it does. As an employee you would only be allowed the exclusion amount.
If you are married and you and your spouse each qualifies under one of the tests. 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.


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.

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