26.09.07

For the tax year 2007, the maximum foreign earned income exclusion for US taxes has been indexed to inflation and raised to $85,700 (up from $82,400 for the 2006 tax year).

The IRS has also identified several locations within Russia with especially high housing costs, relative to average costs in the US. For Americans living in these specific locations, a higher exclusion is available. The table below shows maximum daily and yearly exemptions.

City	Daily Exception	Yearly Exemption
Moscow	249.04	90,900
St. Petersburg	113.70	41,500
Sakhalin Island	212.33	77,500
Vladivostok	212.33	77,500
Yekaterinburg	129.86	47,400

The base exemption for 2007 has been set at $13,712  (up from $13,184 in 2006).

If your tax home is NOT located in one of the above cities, your limitation will be $25,710 for the tax year 2007. Thus, the maximum foreign housing exclusion/ deduction allowed is $11,998 ($25,710 - $13,712) for 2007.

The IRS plans to update this information each year, starting with the tax year 2007.

Source: ExpatCPA.com