Jeremy,an American citizen,earned $200,000 during 2013 while employed in Switzerland.Jeremy is entitled to the maximum foreign-earned income exclusion.Jeremy also incurred $40,000 of deductible expenses attributable to the foreign-earned income.Jeremy may deduct how much in expenses?

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The maximum foreign-earned income exclusion for 2013 was $97,600. Since Jeremy earned $200,000, he can exclude up to $97,600 from his taxable income. This means his taxable income is $102,400 ($200,000 - $97,600). Since he incurred $40,000 in deductible expenses, he can deduct that amount from his taxable income, resulting in a final taxable income of $62,400. The deduction would be limited to $62,400 since it cannot result in a negative taxable income. Therefore, Jeremy may deduct $20,480 in expenses ($62,400 x 0.327, which is the highest federal tax rate for 2013).

Jeremy,an American Citizen,earned $200,000 During 2013 While Employed in Switzerland