If you’re exploring your potential savings using the Foreign Earned Income Exclusion, you might be wondering if you can claim the FEIE and still be eligible for the standard deduction on your taxes. The good news is that you can claim both the Foreign Earned Income Exclusion (FEIE) and the standard deduction on the same tax return, but there are some important factors to keep in mind.
The FEIE excludes foreign earned income from your taxable income, while the standard deduction reduces your taxable income by a fixed amount based on your filing status. These are two separate tax benefits that work together, not against each other. Understanding how they interact, and when itemizing might serve you better, requires looking at your complete tax situation. The interaction becomes more complex for married couples when you’re deciding between FEIE and the Foreign Tax Credit (FTC).
FEIE and Standard Deduction: The Basics
The Foreign Earned Income Exclusion allows qualifying U.S. taxpayers to exclude up to $130,000 (for 2025) of income earned abroad from federal taxation by residing or spending time in FEIE-qualifying countries. You claim this exclusion by filing Form 2555 with your tax return.
The standard deduction is a fixed dollar amount that reduces your taxable income. For 2025, the standard deduction is:
- $14,600 for single filers
- $29,200 for married filing jointly
- $21,900 for head of household
These two benefits stack. If you exclude $130,000 through FEIE and have no other income, you still get your standard deduction. However, since your taxable income is already zero after the exclusion, the standard deduction provides no additional benefit in that scenario.
The standard deduction becomes valuable when you have income, such as investment income, rental income, or general income above the FEIE exclusion ceiling, that doesn’t qualify for FEIE.
When You Actually Benefit from Both
You meaningfully benefit from both FEIE and the standard deduction when you have:
- Foreign earned income above the FEIE limit: If you earn $150,000 abroad, FEIE excludes $130,000, leaving $20,000 taxable. Your standard deduction then reduces that $20,000.
- Mixed income sources: Foreign earned income (excluded via FEIE) plus U.S.-source or passive income (not excludable). For example, if you earn $100,000 working abroad (excluded) and $20,000 in dividend income (taxable), your standard deduction reduces that $20,000.
- Partial-year situations: Part of the year abroad (using FEIE since you can claim the deduction for non-calendar years) and part in the U.S. with domestic income.
In these cases, you’re using FEIE to exclude foreign earned income and the standard deduction to reduce whatever taxable income remains.
Itemized Deductions vs. Standard Deduction with FEIE
You must choose between the standard deduction and itemizing deductions but you cannot claim both. This choice becomes more nuanced when you’re already using FEIE.
Common itemized deductions include:
- State and local taxes (capped at $10,000)
- Mortgage interest
- Charitable contributions
- Medical expenses exceeding 7.5% of adjusted gross income
However, FEIE significantly lowers your adjusted gross income (AGI), which can affect itemized deduction calculations. Medical expense deductions, for example, become easier to claim when your AGI is lower.
For most expats using FEIE, the standard deduction makes more sense because:
- You typically don’t pay U.S. state income taxes while abroad (no SALT deduction)
- Foreign mortgage interest usually doesn’t qualify for U.S. deductions
- Your AGI is already lowered by FEIE, reducing the value of percentage-based deductions.
That said, if you maintained a U.S. home with a mortgage, paid significant U.S. medical expenses, or made substantial charitable contributions, run the numbers both ways.
Married Filing Jointly: Special Considerations
Married couples face additional complexity when combining FEIE with the standard deduction, particularly when only one spouse qualifies for FEIE.
Both Spouses Qualify for FEIE
If both spouses meet the Physical Presence Test or Bona Fide Residence Test and have income earned abroad, each can exclude up to $130,000. Together, you can exclude up to $260,000 of foreign earned income while still claiming the married filing jointly standard deduction of $29,200.
Only One Spouse Qualifies for FEIE
This is where it gets interesting. If only one spouse qualifies for FEIE (perhaps the other was in the U.S. for too many days), you have two options:
Option 1: Married Filing Jointly
- One spouse excludes foreign income via FEIE
- The other spouse’s income remains fully taxable
- You claim the married filing jointly standard deduction ($29,200)
- You may benefit from lower joint tax brackets
Option 2: Married Filing Separately
- The qualifying spouse files separately and claims FEIE
- Each spouse gets a standard deduction of $14,600
- You lose the benefit of joint filing brackets
- This rarely makes sense unless the non-qualifying spouse has very high income
In most cases, married filing jointly makes sense even when only one spouse qualifies for FEIE. The higher standard deduction ($29,200 vs. $14,600 each) and more favorable tax brackets usually outweigh any benefits of filing separately.
When One Spouse Has Only Passive Income
If one spouse qualifies for FEIE on earned income and the other has only passive income (dividends, interest, rental income), the passive income remains fully taxable regardless of filing status. FEIE does not cover passive income.
In this scenario:
- File jointly
- Exclude the qualifying spouse’s foreign earned income via FEIE
- Report all passive income as taxable
- Apply the married filing jointly standard deduction to reduce the passive income’s tax burden.
FEIE vs. Foreign Tax Credit: How Does The Standard Deduction Factor?
While this article focuses on FEIE and the standard deduction, it’s worth noting that your choice between FEIE and the Foreign Tax Credit (FTC) can affect how valuable your standard deduction becomes.
With the Foreign Earned Income Exclusion (FEIE)
Your AGI is reduced by the excluded foreign income, potentially bringing you into lower tax brackets for any remaining taxable income. Your standard deduction applies to this already-reduced income.
With Foreign Tax Credit
Your full foreign income counts toward AGI, but you claim a credit for foreign taxes paid. Your standard deduction reduces your U.S. taxable income before calculating your U.S. tax liability. You then apply the foreign tax credit against that U.S. tax.
For taxpayers with substantial itemizable deductions (particularly state taxes, mortgage interest, or charitable giving), FTC sometimes provides a better overall result because your higher AGI makes those deductions more valuable.
For most expats with straightforward situations and income below the FEIE limit, FEIE plus the standard deduction delivers the simplest and most beneficial outcome.
Common Scenarios: FEIE and Standard Deduction Together
| Scenario | Foreign Earned Income | Other Income | FEIE Exclusion | Taxable Income Before Standard Deduction | Standard Deduction Benefit |
| Single expat, only foreign wages | $90,000 | $0 | $90,000 | $0 | No additional benefit |
| Single expat, foreign wages + dividends | $90,000 | $15,000 | $90,000 | $15,000 | Reduces taxable income to $400 |
| Single expat, high earner | $150,000 | $0 | $130,000 | $20,000 | Reduces taxable income to $5,400 |
| Married filing jointly, both qualify | $100,000 each | $0 | $200,000 | $0 | No additional benefit |
| Married filing jointly, mixed income | $120,000 (one spouse) | $40,000 (other spouse’s U.S. wages) | $120,000 | $40,000 | Reduces taxable income to $10,800 |
Form 2555 and Your Standard Deduction
When you file Form 2555 to claim FEIE, you report your foreign earned income and calculate your exclusion. This exclusion reduces your adjusted gross income on your Form 1040.
Your standard deduction is claimed on Form 1040, Schedule A (or directly on Form 1040 if not itemizing). The IRS applies your standard deduction to whatever income remains after your FEIE exclusion.
There’s no special interaction or additional form required. You simply claim both benefits on the same return following standard filing procedures.
The key point: FEIE reduces your income first, then your standard deduction reduces whatever taxable income remains.
Start Tracking Your FEIE Eligibility
Understanding that you can claim both FEIE and the standard deduction is just the first step. To actually claim FEIE, you must meet either the Physical Presence Test (330 days in foreign countries during a 12-month period) or the Bona Fide Residence Test.
The Physical Presence Test requires precise day counting, including tracking which days count as “full days” in foreign countries and which don’t (transit days, time in international waters, etc.).
Accurate tracking ensures you don’t miss days that could push you over the 330-day threshold and avoid claiming FEIE when you don’t actually qualify. That’s what the location tracking app Nationly helps American expats and digtal nomads with by effortlessly tracking location and
FAQ
Can I claim FEIE, the standard deduction, and the Foreign Tax Credit on the same return?
No. You must choose between FEIE and the Foreign Tax Credit—you cannot claim both for the same income. However, whichever you choose, you can still claim the standard deduction (or itemize). Some taxpayers use FEIE for some income and FTC for other income in the same year, but this requires careful planning and typically professional tax help.
Does claiming FEIE affect my eligibility for the standard deduction?
No. Claiming FEIE does not disqualify you from the standard deduction. However, by reducing your adjusted gross income, FEIE may reduce the practical benefit of your standard deduction if you have little or no taxable income remaining after the exclusion.
Should I itemize deductions instead of taking the standard deduction if I use FEIE?
For most expats, the standard deduction makes more sense. Itemizing typically benefits taxpayers with high state taxes, mortgage interest, or charitable contributions. Since many expats don’t pay U.S. state taxes while abroad and may not have a U.S. mortgage, they rarely have enough itemizable deductions to exceed the standard deduction. However, if you maintain a U.S. home or have significant deductible expenses, calculate both ways.
If my spouse doesn’t qualify for FEIE, should we file separately?
Usually, no. Married filing jointly typically provides better overall results even when only one spouse qualifies for FEIE. The married filing jointly standard deduction ($29,200 for 2025) is twice the married filing separately amount ($14,600 each), and joint filing offers more favorable tax brackets. File separately only in specific situations, such as when one spouse has very high income or significant itemizable deductions.
