Melanie,a U.S.citizen living in Paris,France,for the last three years,earns a salary of $125,000 in 2019.Melanie's housing costs are $24,000 per year,which is reasonable.How much can Melanie exclude from income?

Question

Quizplus · Accepted Answer

According to the IRS, for Tax Year 2019, the foreign earned income exclusion is $105,900. Additionally, Melanie can also exclude foreign housing costs that exceed a certain limit, which is calculated as the excess of the housing costs over 16% of the maximum Foreign Earned Income Exclusion amount ($105,900 x 0.16 = $16,944 for 2019). Therefore, Melanie can exclude $24,000 - $16,944 = $7,056 of her housing costs. 
Thus, her total exclusion is $105,900 + $7,056 = $112,956.