Ready to keep more of your hard-earned cash?
Living and working in Hong Kong gives you powerful FEIE tax savings.
The Foreign Earned Income Exclusion caps at $130,000 for 2025.
Use it to cut your U.S. taxable income.
At American Pacific Tax, we turn complex rules into a step-by-step playbook.
By the end of this guide, you’ll know how to claim, calculate, and combine FEIE strategies.
Your goal: Reduce your U.S. tax liability by at least 25% this year.
Use smart FEIE planning.
Understand FEIE basics
FEIE lets you exclude wages, salaries, commissions, and professional fees earned abroad.
Then remove these amounts from your U.S. taxable income.
For 2025, you can exclude up to $130,000 per person.
It applies only to active income, not passive sources like interest or dividends.
- Exclusion cap: $130,000 for 2025
- Applies to earned income only
- Available per qualifying person
Bookmark our overview of foreign earned income exclusion within 24 hours to set your savings baseline.
Check FEIE eligibility
Qualify for the exclusion by meeting one of two tests: bona fide residence or physical presence.
The bona fide residence test requires living in Hong Kong for a full tax year.
The physical presence test demands 330 days abroad in any 12-month span.
Review our full FEIE eligibility criteria and dive into the FEIE physical presence test details.
Confirm your status within 48 hours to avoid last-minute surprises.
Calculate your exclusion
Your exclusion equals the lesser of your foreign earned income or the annual cap.
Use the cap to plan strategies around bonuses, commissions, and wages.
| Tax year | Exclusion cap |
|---|---|
| 2023 | $120,000 |
| 2024 | $126,500 |
| 2025 | $130,000 |
Crunch your numbers by Friday to set a measurable savings target.
Check FEIE maximum exclusion for precise values.
Claim housing exclusion
Qualified housing expenses can lower your taxable income further.
The housing cap generally equals 30% of the exclusion limit.
| Tax year | Housing cap |
|---|---|
| 2023 | $36,000 |
| 2024 | $37,950 |
Include rent, utilities, and insurance in your calculation.
Claim your FEIE housing exclusion and tally expenses by Tuesday to lock in additional savings.
Combine FEIE with credits
Mix the exclusion with the Foreign Tax Credit to tackle different income types.
Use FEIE for wages and self-employed earnings, and apply the credit to passive income like interest.
- Exclude earned wages and self-employment income
- Claim credits on foreign taxes paid
- Carry forward unused credits to future years
If you run a consulting business in Hong Kong, explore our tips for FEIE for freelancers.
Draft your mix plan today to compare scenarios.
File Form 2555
Attach Form 2555 to your U.S. tax return to claim the exclusion.
Complete these key sections:
- Part I: personal information
- Part II–IV: eligibility tests
- Part VI: housing exclusion
- Part VIII: signature
File your FEIE form 2555 by April 15 to secure your exclusion.
You’ve mapped, calculated, and filed.
Now watch your U.S. tax burden shrink.
At American Pacific Tax, we’re your coach in every quarter.
Book a free strategy session within 7 days to hit your savings goals.
FAQs
How do I qualify for FEIE tax savings?
You must live and work outside the U.S. and meet either the bona fide residence test or the physical presence test. Then file Form 2555 with your tax return.
Can I exclude self-employment income?
Yes, you can exclude foreign-earned self-employment earnings under the FEIE. Note that it does not reduce your self-employment tax liability.
What if I return to the U.S. mid-year?
Your exclusion applies only to income earned while you meet FEIE tests. Pro-rate your cap based on days abroad and apply the physical presence test accordingly.
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