Exclusion vs. Deduction U.S. citizens and resident aliens living outside the United Statesgenerally are allowed the same deductions as citizens and residentsliving in the United States. ofertas de hoteles Noordwijk aan ZeeIf you choose to exclude foreign earned income or housing amounts,you cannot deduct, exclude, or claim a credit for any item that can beallocated to or charged against the excluded amounts. This includesany expenses, losses, and other normally deductible items that areallocable to the excluded income. You can deduct only those expensesconnected with earning includible income. cheap hotels in MontecatiniThese rules apply only to items definitely related to the excludedearned income and they do not apply to other items that are notdefinitely related to any particular type of gross income. These rulesdo not apply to items such as personal exemptions, qualifiedretirement contributions, alimony payments, charitable contributions,medical expenses, mortgage interest, or real estate taxes on yourpersonal residence. For purposes of these rules, your housingdeduction is not treated as allocable to your excluded income, but thededuction for self-employment tax is. If you receive foreign earned income in a tax year after the yearin which you earned it, you may have to file an amended return for theearlier year to properly adjust the amounts of deductions, credits, orexclusions allocable to your foreign earned income and housingexclusions. Example.If you excluded all of your $72,000 foreign earned income in 1998,you would not have been able to claim any deductions allocable to thatexcluded income. If you then receive a bonus of $10,000 in 1999 forwork you did abroad in 1998, you cannot exclude it because it exceedsthe $72,000 foreign earned income exclusion limit in effect for 1998.(You have no housing exclusion.) But, you can file an amended returnfor 1998 to claim the 10/80 of your allocable deductions that are nowallowable ($10,000 included foreign earned income over $80,000 totalforeign earned income).