IRS announces 2016 housing amounts for those abroad

The IRS has issued the annual adjustments to the housing expense limitation for specific locations for purposes of Code Sec. 911, as amended by the Tax Increase Prevention and Reconciliation Act of 2005 (TIPRA) (P.L. 109-222). The adjustments are based on geographical differences in international housing costs relative to housing cost in the U.S.

Limitation adjustment

The notice contains a table (see below) that identifies locations within countries with high housing costs relative to housing costs in the U.S. and provides an adjusted limitation on housing expenses for qualified individuals with housing expenses in one or more of these high cost locations in 2016. The adjusted limitations are for use by individuals (in lieu of the otherwise applicable limitation of $30,390) in determining their housing expenses under Code Sec. 911(c)(2)(A) .

For purposes of determining the housing cost amount for 2015 on Form 2555, Foreign Earned Income, a qualified individual who has incurred housing expenses in one or more high cost locations listed in the table, may use the adjusted limit in the table instead of the $30,390 amount. However, an individual who does not have housing expenses for 2015 in a location listed in the table, is limited to maximum housing expenses of $30,390 in calculating his or her housing cost amount. (IRS Notice 2016-21, IRB 2015-18, March 7, 2016).)

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