Foreign Earned Income Exclusion: Married Filing Jointly

The Foreign Earned Income Exclusion (FEIE) is a U.S. tax code provision for Americans living and working abroad. It allows qualifying individuals to exclude a portion of their foreign-earned income from U.S. income tax. For married couples filing a joint tax return, specific rules apply that can potentially double the exclusion amount.

Qualification Requirements for Married Couples

To use the Foreign Earned Income Exclusion, an individual must have a tax home in a foreign country and meet either the Bona Fide Residence Test or the Physical Presence Test. For married couples filing jointly, each spouse must independently satisfy one of these tests to claim their own exclusion. One spouse’s qualification does not extend to the other, as they are assessed individually for eligibility.

The Bona Fide Residence Test requires a U.S. citizen to be a resident of a foreign country for an uninterrupted period that includes an entire tax year (January 1 to December 31). This test is more subjective and involves demonstrating deeper ties to the foreign country, such as establishing a permanent home, having a long-term visa, and integrating into the local community.

Alternatively, the Physical Presence Test is a mathematical test available to U.S. citizens and resident aliens. To meet this test, a spouse must be physically present in a foreign country or countries for at least 330 full days during any 12-consecutive-month period. The 330 days do not need to be consecutive.

If one spouse meets a test but the other does not, the couple can still file a joint return. The qualifying spouse may claim their individual FEIE against their foreign earned income. The non-qualifying spouse cannot claim any exclusion.

Calculating the Combined Exclusion Amount

The IRS sets a maximum exclusion amount per individual that is adjusted annually for inflation. For the 2025 tax year, the maximum exclusion is $130,000. This limit applies to each qualifying person, not per household.

If both spouses independently meet the qualification tests, each can exclude their foreign earned income up to the annual maximum. This means a married couple filing jointly could exclude a combined total of $260,000 for 2025, provided each spouse has foreign earned income equal to or exceeding the limit. The exclusion for each spouse is calculated separately, and income is attributed to the spouse who performed the services to earn it, without regard to community property laws.

In addition to the FEIE, qualifying individuals can claim a Foreign Housing Exclusion or Deduction for reasonable housing costs that exceed a base amount. The housing exclusion applies to amounts paid with employer-provided funds, while the housing deduction is for self-employed individuals. For a couple in the same foreign household filing jointly, the housing amount is figured jointly.

The base housing amount is 16% of the maximum FEIE for that year. Total housing expenses are also subject to a limit, which is 30% of the maximum FEIE but can be higher for certain high-cost localities specified by the IRS. Claiming a housing benefit reduces the maximum FEIE a spouse can claim by the same amount.

Information and Forms Needed for Filing

Foreign earned income is reported using IRS Form 2555, Foreign Earned Income. If both spouses qualify for the exclusion, each must complete and file a separate Form 2555. This is because eligibility and the exclusion amount are determined individually.

To complete Form 2555, you will need your foreign address, employer details, and occupation. Part II is for the Bona Fide Residence Test and requires the dates the residency began and ended. Part III is for the Physical Presence Test and requires a log of travel, including arrival and departure dates for time spent in the U.S. You must also provide records of your foreign earned income in U.S. dollars and qualified housing expenses if applicable.

The Joint Filing Process

The completed Form(s) 2555 must be attached to your Form 1040 tax return, and the total combined exclusion amount is entered on Schedule 1. The tax on your remaining, non-excluded income must be calculated using the Foreign Earned Income Tax Worksheet from the Form 1040 instructions. This calculation applies the tax rates that would have been used had the excluded income still been part of your taxable income, which results in a higher tax on your non-excluded income than the standard tax tables would suggest.

When e-filing, most tax preparation software supports the FEIE. The software will guide you through completing the digital version of Form 2555 and attaching it to your Form 1040 submission.

For paper returns, the completed Form 1040 with attached Form(s) 2555 must be mailed to the IRS address for international filers: Department of the Treasury, Internal Revenue Service, Austin, TX 73301-0215, USA. This address is different from standard domestic filing addresses.