The Post-TIPRA Foreign Earned Income and Housing Exclusions for Individuals — footnotes

¹This article addresses issues related to filing U.S. income tax returns, not foreign income tax returns.

²Regs. Sec. 1.911-4(c) refers to this threshold as the “base housing amount.”

³Joint Comm. on Tax’n, Estimated Revenue Effects of the Conference Agreement for the Tax Increase Prevention and Reconciliation Act of 2005 (JCX-18-06, 5/9/06).

⁴See TIPRA Section 515; Conf. Rep’t No. 109-455, 109th Cong., 2d Sess. (2006) (hereinafter, “TIPRA Conference Report”), n. 553. A U.S. resident alien who is a citizen of a country with which the U.S. has a tax treaty may qualify for the Sec. 911 exclusion under the bona fide residence test via application of a treaty nondiscrimination provision.

⁵Dave Arnett, 126 TC 89 (2006).

⁶Foreign earned income is first reduced by any exclusion or deduction claimed for housing costs under Regs. Sec. 1.911-3(d)(2)(i).

⁷See the TIPRA Conference Report., note 4 supra, at n. 556.

⁸Notice 2006-87, IRB 2006-43, 766.

⁹Examples 2 and 3 in Regs. Sec. 1.911-4(f) illustrate the housing cost exclusion for tax years 1982 and 1983. In Example 4 in this article, the exclusion amount has been updated, and the numbers have been changed, to 2005 and 2006.

¹⁰This is the total amount of foreign earned income, as defined in Regs. Sec. 1.911-3. This does not refer to foreign earned income as defined in Sec. 911(a), which is the amount allowed as an exclusion.

¹¹See Regs. Sec. 1.911-4(e).

¹²However, careful attention should be given to the deduction limit in Sec. 219 (b).

¹³See note 4, supra.

¹⁴George H. Jones, TC Memo 1989-616.

¹⁵See Regs. Sec. 1.911-5(a)(3)(ii). This procedure is available when the second home is maintained due to adverse living conditions.

¹⁶According to Prystay and Herman, “Tax Hike Hits Home for Americans Abroad,” Wall Street Journal Online (7/19/06), p. D1, “[a]verage annual rents for expat executives in Moscow range from $60,000 to $180,000, well above the $11,536 cap.”