Yes, you must have a tax home in a foreign country in order to claim the foreign earned income exclusion. According to the IRS instructions for Form 2555, to qualify for the exclusion, you must meet the tax home test, which requires that your tax home be located in a foreign country (or countries) throughout your period of bona fide residence or physical presence, whichever applies.
Tax Home Definition
- Your tax home is defined as your regular or principal place of business, employment, or post of duty, regardless of where your family resides.
- If you do not have a regular or principal place of business due to the nature of your trade or business, your tax home is considered to be your regular place of abode (where you regularly live).
Key Requirements
- Your abode (where you maintain family, economic, and personal ties) must be in a foreign country during the qualifying period.
- You are not considered to have a tax home in a foreign country if your abode is in the United States, except if you are serving in support of the U.S. Armed Forces in a combat zone.
- Maintaining a dwelling in the United States does not automatically mean your abode is in the U.S., especially if you are temporarily present or if your family and economic ties are abroad.
Source:
Form 2555 Instructions (2025)
Disclaimer: Always verify details with the current IRS forms and instructions, as well as with your state’s Department of Revenue. For complex situations, consult a qualified tax professional or attorney.