Qualifying for FEIE
Qualifying for the Foreign Earned Income Exclusion (FEIE) is relatively simple. First, your tax home must be in a foreign country through a qualifying residency period. Your tax home is where you are indefinitely engaged as an employee or self-employed person. Second, you must have had foreign earned income: salary, self-employment, and/or employer-provided meals, lodging or car. as well as certain allowances (Publ 54). Third, under the Bona Fide Residency Test, you must have been residing in one or more foreign countries for the entire tax year (usually calendar). Under the Physical Presence Test, you must have been physically present in one or more foreign countries for at least 330 days during the calendar or fiscal year or else 12 months starting or ending in 2007. These rules apply to US citizens and US resident aliens.
Once foreign residency is established, earnings are considered foreign even if sourced from the United States. Foreign income above the $87,500 threshold is subject to US taxation.