Cuba is a unique country when it comes to FEIE. While nearly every other sovereign nation on earth counts toward FEIE eligibility, Cuba is subject to unique restrictions that can disqualify your time there (and the income you earned there) from tax benefits. Understanding these rules is critical if you’ve traveled or worked in Cuba or are considering opportunities there.
The issue isn’t about Cuba being a sanctioned country or lacking diplomatic relations. Instead, it’s about specific U.S. travel restrictions that create an unusual exception to normal FEIE rules. This guide breaks down exactly how Cuba affects your tax planning as you track your progress towards the Foreign Earned Income Exclusion, what triggers the restrictions, and the one important exception for Guantanamo Bay.
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Why Cuba is different for FEIE
For most foreign countries, the FEIE rules are straightforward: if you meet either the Bona Fide Residence Test or the Physical Presence Test, your foreign earned income qualifies for exclusion (up to the annual limit, currently $130,000 for 2025). Countries under sanctions, countries without U.S. diplomatic relations, and even designated combat zones all follow these standard rules.
Except Cuba.
According to IRS Form 2555 instructions, if you were in Cuba in violation of U.S. travel restrictions, three specific consequences apply:
- Time in Cuba doesn’t count toward the Physical Presence Test’s 330-day requirement
- Income earned in Cuba doesn’t qualify as foreign earned income for FEIE purposes
- Housing expenses in Cuba (or housing expenses for your spouse or dependents elsewhere while you were in Cuba) don’t count as qualified housing expenses
These restrictions exist because U.S. law prohibits most travel to Cuba without authorization. The IRS won’t provide tax benefits for time spent or income earned while violating those travel restrictions.
The legal foundation
The Cuba travel restrictions stem from the Trading with the Enemy Act and subsequent OFAC-enforced regulations. These restrictions have been sometimes loosened, sometimes tightened over the years, but they’ve remained in place in some form since 1963.
The IRS explicitly ties FEIE eligibility to compliance with these restrictions. You can’t claim tax benefits for activities conducted in violation of U.S. law, even if those activities would otherwise qualify for FEIE in any other foreign country.
What “in violation of travel restrictions” means
This is where things can get complicated… U.S. travel to Cuba isn’t completely prohibited, it’s restricted. OFAC authorizes travel for specific purposes, and if your Cuba travel falls under an authorized category, you won’t violate restrictions.
Authorized Categories for Cuba Travel
OFAC currently authorizes travel to Cuba under 12 general license categories:
- Family visits
- Official government business
- Journalistic activity
- Professional research and meetings
- Educational activities
- Religious activities
- Public performances, athletic competitions, exhibitions
- Support for the Cuban people
- Humanitarian projects
- Activities of private foundations, research, or educational institutes
- Exportation, importation, or transmission of information or informational materials
- Certain authorized export transactions
If your Cuba travel fell under one of these authorized categories, you were not in violation of travel restrictions. In that case, your time in Cuba would count toward FEIE eligibility, and income earned there could qualify for the exclusion.
The Documentation Problem
The challenge is that the burden of proof rests on you. If you claim FEIE benefits for time in Cuba or income earned there, you must be prepared to demonstrate your travel was authorized under OFAC regulations.
This means maintaining detailed documentation showing:
- Which authorized category your travel fell under
- Evidence supporting your qualification for that category (work contracts, research documentation, family relationship proof, etc.)
- Dates of travel and activities conducted
Without this documentation, the IRS can disallow your FEIE claim for Cuba-related time and income, potentially resulting in significant back taxes, penalties, and interest.
Unauthorized Travel Scenarios
Travel to Cuba for tourism, general business development, or work that doesn’t fall under authorized categories violates travel restrictions. Common scenarios that would disqualify FEIE eligibility include:
- Tourism: Pure vacation travel, even if you have family in Cuba
- Unauthorized business: Working for a Cuban entity or foreign company in Cuba without proper authorization
- Extended stays: Remaining in Cuba longer than what was permitted under your authorized category
- Unauthorized activities: Engaging in activities outside your authorized travel purpose
If any of your Cuba time was unauthorized, those specific days won’t help you qualify under the Physical Presence Test, and income earned during that time doesn’t qualify for FEIE.
The Guantanamo Bay Exception
There’s one clear-cut exception to Cuba’s FEIE restrictions: the American Naval Base at Guantanamo Bay, Cuba.
According to the IRS, if you performed services at the U.S. Naval Base at Guantanamo Bay, you were not in violation of U.S. travel restrictions. This means:
- Time at Guantanamo Bay counts toward the Physical Presence Test
- Income earned at Guantanamo Bay qualifies as foreign earned income for FEIE
- Housing expenses at Guantanamo Bay count as qualified housing expenses
This exception makes sense given that Guantanamo Bay, while geographically in Cuba, operates under U.S. jurisdiction through a lease agreement that predates the Cuban revolution. Personnel working at the base are there under official U.S. authorization, and not in violation of travel restrictions.
Who the Guantanamo Bay exception affects
The Guantanamo Bay exception primarily benefits:
- Military personnel stationed at the naval base (though they face separate limitations on excluding military pay for FEIE)
- Civilian contractors working on base
- Federal employees assigned to Guantanamo Bay
- Support staff and service providers on base
If you are not enlisted and worked at Guantanamo Bay, treat your time there like time in any other foreign country for FEIE purposes. The standard rules will apply. You just need to meet the Physical Presence Test or Bona Fide Residence Test like any other expat.
Impact on the Physical Presence Test
The Physical Presence Test needs your body, your person, to be in a foreign country (or countries) for at least 330 full days over a 12-month period. Cuba’s restrictions can create problems for expats trying to meet this threshold.
Scenarios Where Cuba Time Becomes Critical
Scenario 1: Significant Cuba time in your 12-month period
If you spent 60 days working in Cuba without proper authorization, those 60 days don’t count. You now need 330 qualifying days from the remaining 305 days available, which is mathematically impossible. Your entire FEIE claim fails.
Scenario 2: Close to the threshold
You spent 335 days outside the U.S. in your 12-month period, including 10 days in Cuba on unauthorized business. Those 10 days don’t count, leaving you with only 325 qualifying days. You miss the 330-day requirement by 5 days, disqualifying you from FEIE for the entire year.
Scenario 3: Mixed authorized and unauthorized time
You spent 30 days in Cuba—15 days conducting authorized professional research and 15 days on leisure travel. Only the 15 research days count toward your Physical Presence Test. The leisure days don’t count because they weren’t authorized.
The All-or-Nothing Problem
FEIE savings can be large and even stack with the standard deduction, but it operates on an all-or-nothing basis for each tax year. If you fail to meet the Physical Presence Test (or Bona Fide Residence Test), you’ll lose the exclusion for that entire year, regardless of how close you came.
Even a few days of unauthorized Cuba travel can push you below the 330-day threshold, costing you the ability to exclude up to $130,000 of foreign-earned income. The tax consequences can be severe.
Worse, if you rely on the FEIE annually and revoke your election in one year, you must wait five years before you can elect it again. You can do the math using our FEIE savings calculator, but the additional taxes paid you can be liable for can be significant.
How to Handle Cuba Time When Filing
If you’re an American citizen, the best approach is to avoid any travel to Cuba unless you can clearly document that it falls under a category authorized by OFAC. And if so, you need to address it carefully when filing Form 2555 to keep your Foreign Earned Income Exclusion.
Documentation Requirements
Gather and maintain these records:
- Travel documentation: Passport stamps, flight records, hotel receipts to prove when you entered and left Cuba
- Authorization evidence: Documents showing your travel fell under an authorized OFAC category (if applicable)
- Income attribution: Records showing what income (if any) was earned during Cuba time versus elsewhere
- Housing expense records: Separate accounting for housing costs in Cuba versus other countries
It’s very possible that the IRS will ask you to provide this kind of documentation during an audit. Without it, they can disallow your entire FEIE claim.
Calculating Your Qualifying Days
When completing Form 2555, you must accurately calculate your days of physical presence. For Cuba time:
- Identify total days in Cuba during your 12-month period
- Determine which (if any) were authorized under OFAC regulations
- Count only authorized days toward your 330-day requirement
- Exclude unauthorized days from your count
If you’re unsure whether your Cuba travel was authorized, err on the side of caution. Claiming days that don’t qualify can result in penalties, interest, and potential accusations of tax fraud if the IRS determines that you knew the days didn’t count.
Reporting Cuba Income
If you earned income in Cuba, report it accurately:
- Authorized Cuba time: Include this income as foreign earned income on Form 2555
- Unauthorized Cuba time: Report this income on your Form 1040 as regular income without FEIE treatment
Some tax preparers recommend including a statement with Form 2555 explaining any Cuba travel and how you determined it was (or wasn’t) authorized. While not required, this kind of proactive disclosure can help prevent IRS questions later.
Combat Zones vs. Cuba: Understanding the Difference
It’s worth clarifying why combat zones count for FEIE but unauthorized Cuba time doesn’t.
Combat Zone Rules
Time spent in designated combat zones does count toward FEIE’s Physical Presence Test. The IRS even has a special provision allowing U.S. citizens or residents serving in combat zones in support of the Armed Forces to qualify for FEIE while they maintain an abode in the United States.
Why do combat zones count? Because:
- Service in combat zones is authorized (even required) by the U.S. government
- You’re not violating any U.S. law by being there
- The tax code specifically accommodates military and civilian personnel in combat zones
Cuba’s Different Status
Cuba’s restrictions exist because travel there violates U.S. law unless you have specific authorization. The IRS won’t provide tax benefits for activities conducted illegally.
Sanctions vs. Travel Restrictions: Cuba Is Unique
Many expats mistakenly lump Cuba together with other sanctioned countries like Iran, North Korea, or Syria. However, Cuba’s FEIE treatment differs significantly.
Other Sanctioned Countries
For most sanctioned countries, time spent there still counts toward FEIE eligibility. If you work in Iran, North Korea, or Syria, your time there will count toward the Physical Presence Test, and income earned there can qualify for FEIE (though you face serious legal risks from sanctions violations separate from tax considerations).
The key difference? These countries are subject to economic sanctions, but there are no specific travel restrictions that make your physical presence there a violation in the same way that Cuba travel is restricted.
Why Cuba Alone Has This Treatment
Cuba’s unique status stems from its specific travel restrictions under OFAC regulations, not merely economic sanctions. The travel restrictions create a legal framework where unauthorized presence itself is a violation, which the IRS then references in denying FEIE benefits.
This doesn’t mean working in other sanctioned countries is legally permissible, since any sanctions violation can carry severe penalties. But for FEIE purposes specifically, Cuba stands alone in having time and income explicitly disqualified based on travel restrictions.
Recent Changes and Future Outlook
Cuba’s FEIE restrictions have remained consistent even as U.S.-Cuba relations have fluctuated. However, the underlying OFAC travel restrictions have changed multiple times over the past two decades.
Historical Context
- 2009-2016: The Obama administration progressively loosened Cuba travel restrictions, expanding authorized categories and simplifying compliance.
- 2017-2019: The Trump administration tightened restrictions, eliminating individual people-to-people educational travel and increasing enforcement.
- 2021-2025: The Biden administration made modest adjustments but maintained many Trump-era restrictions.
- 2025 onwards: In his second term, President Trump has since reversed the Biden administration’s last-minute Cuba sanctions relief, and has taken a “maximum pressure” approach.
These policy changes might affect whether your Cuba travel is deemed authorized or not, but they don’t change the IRS’s position. Unauthorized Cuba time doesn’t count for FEIE, regardless of which administration’s policies governed your travel.
What Could Change?
The Cuba FEIE restrictions could only change in two ways:
- Congress amends the tax code: The restriction appears in IRS instructions based on the underlying law. Congressional action could remove the Cuba-specific language.
- OFAC completely lifts travel restrictions: If Cuba travel became unrestricted, the FEIE disqualification would become moot, and all Cuba time would be authorized.
Neither change appears imminent. For the foreseeable future, expats should expect Cuba to maintain its unique status in FEIE calculations.
Key Takeaways: Cuba and Your FEIE
Cuba’s unique treatment under FEIE rules creates traps for unwary expats:
- Cuba isn’t automatically disqualified, but unauthorized time there definitely is
- Authorization under OFAC regulations determines whether Cuba time and income count
- Guantanamo Bay is the exception, since time there always counts
- Burden of proof rests on you, so maintain your documentation proving authorized travel
- Even small amounts of unauthorized Cuba time can disqualify your entire FEIE claim if you’re close to the 330-day threshold
If you’re planning Cuba work or travel, verify authorization before going. If you’ve already been to Cuba, carefully evaluate whether that time qualifies for FEIE purposes. When in doubt, consult a professional rather than risk an IRS challenge to your entire FEIE claim.
FAQ
Can I claim FEIE if I spent just a few days in Cuba on vacation?
If those vacation days weren’t authorized under OFAC regulations (and tourist travel generally isn’t authorized), they don’t count toward your Physical Presence Test. If you have sufficient qualifying days from other countries to reach 330 days without the Cuba time, your FEIE claim remains intact. Just don’t count the Cuba days. However, if those few days would push you below 330 qualifying days, your entire FEIE claim fails for that year.
What if I traveled to Cuba before the current restrictions were in place?
The FEIE rules are based on whether travel violated restrictions that were in effect at the time of your travel. If your Cuba travel occurred during a period when it was authorized (for example, during the loosened restrictions of the Obama administration), and you met the requirements of that era’s authorized categories, your time and income may qualify. You’d need to document compliance with the rules as they existed then.
Does working remotely for a non-Cuban company while physically in Cuba avoid the restrictions?
No. The FEIE restriction is based on where you were physically present and whether that presence was authorized, not who you worked for. If you were in Cuba in violation of travel restrictions, income earned during that time doesn’t qualify for FEIE regardless of whether your employer or clients were Cuban, American, or from any other country.
How does the IRS find out about unauthorized Cuba travel?
The IRS can discover Cuba travel through passport stamps, banking records showing Cuba-related transactions, IP addresses showing you accessed accounts from Cuba, social media posts, or simply through discrepancies in your documentation (Form 2555). During an audit, the IRS can request detailed proof of where you were each day.
If my Cuba travel was unauthorized, can I still claim FEIE for time in other countries?
Yes, assuming you meet the Physical Presence Test (330 days) or Bona Fide Residence Test without counting the unauthorized Cuba time. The Cuba restrictions only disqualify the Cuba-specific days and income. Your time and earnings in other countries can still qualify for FEIE. You’ll need to separately account for what was earned in Cuba (taxable) versus other qualifying locations (excludable).
