"If you meet certain requirements, you may qualify for the foreign earned income and foreign housing exclusions and the foreign housing deduction. If you are a

"If you meet certain requirements, you may qualify for the foreign earned income and foreign housing exclusions and the foreign housing deduction. If you are a U.S. citizen or a resident alien of the United States and you live abroad, you are taxed on your worldwide income. However, you may qualify to exclude from income up to $87,600 of your foreign earnings. In addition, you can exclude or deduct certain foreign housing amounts." It's much more complicated than this but that's the jist of it. http://www.irs.gov/businesses/small/international/article/0,,id=97130,00.html http://www.irs.gov/businesses/small/international/article/0,...