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Old 09.02.2010, 21:13
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Re: US Tax Liabilities (federal)

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You can deduct the rent paid in Switzerland for the US tax return?
You can deduct them if you're self-employed.

If you're not self-employed, you can exclude them in addition to taking the foreign earned income exclusion. (Naturally the housing exclusion only applies if you make more than 91k). However, there are limitations to this exclusion -- you don't just exclude all of the amounts you paid in rent. There's a floor and a ceiling -- the floor is 16% of the Foreign Income Exclusion ($14,624 for 2009) and the ceiling for Zurich is 38,398 (it's higher in zurich than other places, where the ceiling will be around 25k).

So if you live in Zurich and you paid 50k in Rent last year... this is higher than the ceiling which is the max amount you can take into consideration. So you'll only be able to exclude up to 38,398. Then you subtract the "floor" from this amount. 38398-14624 = 23774. 23774 is your housing exclusion that you can use on top of your foreign earned income exclusion. So your total exclusion is 91400+23774

Disclaimer: i'm not an accountant and my area of expertise is Corporate tax, not individual tax, so I may be incorrect.
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