The IRS has updated the foreign housing expense exclusion/deduction amounts for 2013. The maximum housing expenses for 2013 is $29,280 for a taxpayer who meets the tax home test and either the bona fide resident or physical presence test for the entire tax year. The adjusted limitation applies in lieu of the otherwise applicable limitation and is provided for each location on a daily and full-year basis.
The adjusted limitations apply to tax years beginning on or after January 1, 2013. Taxpayers may, however, elect to apply the 2013 adjusted limitations to the 2012 tax year, in lieu of the adjusted limitations provided in Notice 2012-19, 2012-1 CB 440, if the 2013 limitations are higher. The IRS anticipates that future annual notices providing adjustments to housing expense limitations will make a similar election available for housing expenses incurred in the immediately preceding year.
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