Contract soldiers now qualify for the foreign earned income exclusion

If you are a U.S. citizen, and your tax home is in a foreign country during 2018, and you meet all the other rules, you can exclude up to $104,100 of your foreign earned income from being taxed in the U.S. However, the foreign earned income exclusion was not available to U.S. Military contractors.

The Bipartisan Budget act of 2018 changed the tax home requirement, and now eligible taxpayers can claim the earned income exclusion even if their tax home is within the United States. Eligible taxpayers consist of certain U.S. citizens or resident aliens working as contractors or employees of contractors supporting the U.S. Armed Forces in designated combat zones.

See your licensed tax professional for further guidance.

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