Melanie,a U.S.citizen living in Paris,France,for the last three years earns a salary of $110,000 in 2013.Melanie's housing costs are $24,000 per year,which is reasonable.How much can Melanie exclude from income?

Question

Quizplus · Accepted Answer

Melanie is eligible for the Foreign Housing Exclusion. The exclusion is based on the difference between the taxpayer's eligible housing expenses and a base amount determined by the taxpayer's income.

For taxpayers in Paris, the base amount for 2013 is $16,016. Melanie's eligible housing expenses are $24,000.

Melanie's exclusion amount is calculated as follows:

$24,000 (eligible housing expenses) - $16,016 (base amount) = $7,984

Melanie can exclude $7,984 from her income.

Therefore, the correct answer is C) $105,984 (Melanie's salary of $110,000 minus the exclusion amount of $7,984).