Digital Nomad
Digital Nomads & U.S. Foreign Earned Income Relief: Recent Waiver Changes in Adversity Zones
New U.S. IRS policy expands eligibility for the foreign earned income exclusion for individuals forced to flee due to wars or disasters—critical for nomads in affected regions.
By NomadicTax Research Team • 5-8 min read • April 20, 2026
## Background: Foreign Earned Income Exclusion (FEIE)
The U.S. tax code allows eligible **citizens or resident aliens living abroad** to exclude up to a limit of their foreign earned income (FEIE) if they either meet the **bona fide residence test** or the **physical presence test**. Minimum time requirements under § 911(d)(4) typically define eligibility. ([irs.gov](https://www.irs.gov/irb/2026-13_IRB?utm_source=openai))
## Recent Policy Change: Waiver for Adversity-Zone Taxpayers
In *Revenue Procedure 2026-16*, published in the **Internal Revenue Bulletin** on **March 23, 2026**, the IRS added several countries—**Haiti, Ukraine, Democratic Republic of the Congo, South Sudan, Iraq, Lebanon, and Mali**—to its “waiver countries” list for tax year **2025**. ([irs.gov](https://www.irs.gov/irb/2026-13_IRB?utm_source=openai))
This waiver allows individuals forced to leave one of these nations due to war, unrest, or similar conditions to have the time requirements for the FEIE **waived**. That means they can still qualify even if they didn’t meet the presence or residence thresholds because circumstances beyond their control prevented them. ([irs.gov](https://www.irs.gov/irb/2026-13_IRB?utm_source=openai))
## Why This Matters for Digital Nomads and Expats
- **Unexpected disruptions** (e.g., evacuations, travel restrictions) often make it impossible to meet physical presence thresholds (e.g., 330 days abroad). Now those disrupted in specified countries can still benefit.
- Individuals in the process of relocating due to safety or humanitarian concerns should review their eligibility under this waiver for 2025 returns.
- The list of waiver countries could expand in future years: stay current.
## Practical Steps for Nomads Considering This Relief
1. **Document circumstances** that prevented compliance (e.g., evacuation orders, state of emergency declarations). Keep travel itineraries, media reports, and government documentation.
2. Determine whether your tax home was in one of the listed countries, and if the hardship or unrest caused departure before meeting needed presence.
3. If eligible, make a **formal election on return for TY 2025** to claim exclusion. Use IRS forms referencing § 911 and Rev. Proc. 2026-16.
4. Track income sources and days abroad carefully: these rules interact with income thresholds, housing exclusion, and foreign tax credits.
## Example: Ex-South Sudan Nomad
Lina lived in South Sudan through mid-2025 but had to leave due to escalating violence. She didn’t meet the physical presence test (330 days) or establish bona fide residence. With the country on the waiver list, Lina may still file for FEIE for tax year 2025, excluding eligible foreign earned income—if she provides evidence of being forced to leave and satisfies remaining requirements.
## Caveats & Watch-Outs
- The waiver applies only for **time requirements**, not income limits or other conditions.
- It is only effective for **tax year 2025** for the listed countries, though similar measures might be extended.
- File timely and accurately: missed deadlines still lead to penalties unless relief applies.
## Conclusion
This waiver broadens the safety net for nomads and expats whose ability to reside or remain in a country has been disrupted. If you left one of the newly listed countries due to extraordinary circumstances in 2025, you may now qualify for FEIE relief—even if you didn’t meet traditional tests. Keep good records, consult with a tax professional if needed, and remember: the key is being able to show the hardships and timing clearly.