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Horizons April - United States

GES Newsflash United States – US Treasury Updated Housing Cost Amounts for 2010

Horizons

 

Background

The United States Treasury has recognized the increasing cost of housing around the world, and adjusted the limitation to provide equity to US taxpayers in certain specific locations. The added election to apply these limitations to the first prior year will continue to provide flexibility to US taxpayers who are incurring increased housing costs while on international assignment.

For 2010, the foreign earned income limitation is $91,500, so the housing cost amount is limited to $27,450. The base housing amount is 16% of the foreign earned income limitation, therefore, the housing exclusion for 2010 is limited to $12,810 ($27,450-$14,640). Notice 2010-27 provides guidance for specific locations in 2010 where a taxpayer can claim a housing cost amount above this limitation.

Location amounts were not published by the IRS for 2009. As a result, qualified individuals incurring housing expenses in 2009 should use the amounts published in 2008.

Key findings

The United States Treasury has recognized the increasing cost of housing around the world, and adjusted the limitation to provide equity to US taxpayers in certain specific locations. The added election to apply these limitations to the first prior year will continue to provide flexibility to US taxpayers who are incurring increased housing costs while on international assignment.

For 2010, the foreign earned income limitation is $91,500, so the housing cost amount is limited to $27,450. The base housing amount is 16% of the foreign earned income limitation, therefore, the housing exclusion for 2010 is limited to $12,810 ($27,450-$14,640). Notice 2010-27 provides guidance for specific locations in 2010 where a taxpayer can claim a housing cost amount above this limitation.

Location amounts were not published by the IRS for 2009. As a result, qualified individuals incurring housing expenses in 2009 should use the amounts published in 2008.

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