The Foreign Earned Income Exclusion (FEIE) allows US expats to exclude a portion of their foreign income from US taxes.
The exclusion amount is adjusted annually for inflation and allows qualifying expats to exclude a significant portion of earned income.
To qualify, you must meet one of the following:
The FEIE only applies to earned income, not investment income or other passive income sources.
It also does not eliminate self-employment tax in most cases.
Not always. Some expats benefit more from using the Foreign Tax Credit instead.
(This is where many people make costly mistakes.)
The next step is comparing FEIE vs the Foreign Tax Credit to determine which strategy works best for your situation.