If you live and work in Hong Kong as a US citizen or resident alien, meeting the feie eligibility criteria can let you exclude up to $130,000 of your foreign-earned income for 2025.

In short, you need foreign earned income, a foreign tax home, and to pass either the bona fide residence test or the physical presence test.

At American Pacific Tax, we guide US expats through each step so you can keep more of your hard-earned income.

Confirm foreign earned income

Foreign earned income includes wages, salaries, professional fees, or other payments you receive for services performed while living abroad. It does not cover passive income such as interest, dividends, or rental income.

  • Counts as foreign earned income

  • Compensation for work performed in Hong Kong

  • Self-employment earnings from overseas clients

  • Professional fees for consulting or freelance services

  • Does not count as foreign earned income

  • Interest, dividends, or other investment returns

  • Distributions from a corporation’s earnings and profits (instead of wages)

To see full details on what qualifies, visit our guide to the foreign earned income exclusion.

Verify foreign tax home

Your tax home is your main place of business, employment, or post of duty—and it must be in a foreign country. You establish a foreign tax home when you live and work abroad for an indefinite period, without keeping a permanent abode in the US (aside from brief visits).

Signs your tax home is in Hong Kong:

  • Your primary employment or self-employment is based there
  • You rent or own a dwelling you intend to use long term
  • You sever significant ties with the US (for example, closing a US home)

For a full list of requirements, see our overview of FEIE requirements.

Pass a qualification test

You must satisfy one of two IRS tests to claim the exclusion.

Bona fide residence test

You qualify if you reside in Hong Kong for an uninterrupted period that includes a full tax year (January 1 through December 31 for calendar-year filers). Intent matters—you need to show you meant to stay indefinitely, not just for a short assignment.

Physical presence test

Under this test, you must be physically present in a foreign country for at least 330 full days in any consecutive 12-month period. You can choose the 12-month window that best fits your travel schedule. Learn more about the FEIE physical presence test.

File exclusion claim

Once you meet the criteria, you claim the exclusion on Form 2555 with your Form 1040.

Complete Form 2555

Attach Form 2555 to your US tax return and fill in details about your foreign earned income, tax home, and which test you used. For step-by-step guidance, see our FEIE form 2555 walkthrough.

Evaluate housing exclusion

If you pay rent or housing expenses in Hong Kong, you may also claim a foreign housing exclusion or deduction. That benefit sits on Form 2555 too. Find rules and limits in our guide to FEIE housing exclusion.

Know exclusion limits

For 2025 you can exclude up to $130,000 of foreign-earned income per qualifying individual. Married couples can each claim their own exclusion if both meet the tests. To check annual updates, visit our FEIE maximum exclusion page.

Self-employed expats should note that while you can exclude your earnings, self-employment tax still applies. For more on that, see FEIE for freelancers.

Now that you know the steps, you’re ready to trim your US tax bill.

Next, explore our resources on FEIE tax benefits and calculate your savings with FEIE tax savings.

Frequently asked questions

What income counts toward FEIE eligibility?

Foreign earned income covers wages, salaries, and fees you earn for services performed while living abroad. It excludes passive sources (interest, dividends) and corporate distributions that aren’t wages.

Can each spouse claim the exclusion?

Yes, if both you and your spouse meet the FEIE eligibility criteria independently, you can each exclude up to the annual limit. You file separate Forms 2555.

Can I exclude self-employment income?

You can exclude up to the FEIE limit of any self-employment earnings you receive for work done abroad. Note that self-employment tax (Social Security and Medicare) still applies. For details, see our feie for freelancers.