Entering Foreign Housing Exclusion into TurboTax:
The Interview Questions do not offer guidance for deduction vs exclusion
The foreign housing deduction and exclusion are the same thing, but one applies to employer-provided compensation like wages (the exclusion) and the other applies to self-employment earnings (the deduction.) So, your choice of exclusion versus deduction is dependent on the type of income you report.
When you go through the foreign earned income section in TurboTax, you are asked to enter your foreign housing expenses in addition to your foreign earned income, and the program calculates your maximum foreign earned income exclusion based on those entries.
Here is more on the subject: Foreign earned income exclusion or deduction
Thank you This is very helpful. What if I was recently laid off. Do I therefore use the Foreign housing DEDUCTION since I am paying my rent, utilities, insurance overseas. Thanks for your advice.
The foreign housing deduction is limited by your foreign earned income exclusion. Without a foreign earned income exclusion, you can't qualify for the housing deduction. They are interrelated. So, if don't have any foreign earned income because you were laid off, you won't qualify for a foreign housing exclusion/deduction.
Thank you for this info. So for the first three months of 2021 I was employed and had income from salary and severance. Therefore I had Foreign earned income, which actually was in excess of my foreign earned income exclusion of 109,000 (whatever the exclusion maximum is 2021).
But starting in April 2021 I was laid off. So therefore If I pay for rent by myself without any other income then I can't deduct my rent.
Please correct me if I am wrong. Thanks again for your clarification
Correct, if you are not working, you cannot claim the exclusion for the time you are not working. So you would be able to claim your housing exclusion for January through April.