What is the threshold for excluding foreign earned income for U.S. taxpayers?

The threshold for excluding foreign earned income for U.S. taxpayers is $108,700. This amount reflects the maximum foreign earned income exclusion that individuals can claim under the Foreign Earned Income Exclusion (FEIE) provisions set forth in the Internal Revenue Code. The FEIE allows qualifying individuals to exclude a portion of their foreign income from U.S. taxation, helping to alleviate the burden of double taxation for those earning income while residing in foreign countries.

It's important to recognize that this amount is adjusted annually for inflation, which is why the figure may change over time. For tax year 2021, for example, the threshold was indeed $108,700, making it crucial for taxpayers to stay informed about any updates to this exclusion in subsequent tax years. Understanding this threshold is vital for U.S. expatriates or individuals working abroad to effectively plan their taxes and maximize their eligible deductions.