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Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 29535
Experience:  Taxes, Immigration, Labor Relations
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how much is the exclusion amount for housing for a person working

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how much is the exclusion amount for housing for a person working in Riyadh S.Arabia

LEV :

Hi and welcome to Just Answer!
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 2012, the maximum foreign earned income exclusion is $95,100 per year; 16% of this amount is $15,216, or $41.57 per day. To figure your base housing amount if you are a calendar-year taxpayer, multiply $41.57 by the number of your qualifying days during 2012.

Customer:

Now the taxpayer is in Riyadh and family living in another country - does it matter

Customer:

Secondly the housing deduction is same for every country or does it differ from country to country,

LEV :

That is a maximum amount of exclusion - regardless in which country the person lives. Actual exclusion is based on actual housing expenses but may not be more than the maximum calculated as per above.

Customer:

this amount is added to the exclusion amount which in turn becomes the non taxable amount.

LEV :

Above is related to the base housing amount.
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 2012, this is generally $77.95 per day ($28,530 per year). However, the limit will vary depending upon the location of your foreign tax home. The limits for high-cost localities are listed in the Instructions for Form 2555 - see page 6 - http://www.irs.gov/pub/irs-pdf/i2555.pdf

LEV :

If there is no separate listing for your locality - the general limit - $77.95 per day ($28,530 per year) is applied.

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