Digital Nomad
Living Abroad? Foreign Earned Income Exclusion & Waivers in Ill-Defined Conflict Zones
Recent IRS updates expand the list of countries qualifying for waivers of residency requirements under section 911—crucial for expatriates and digital nomads in unstable regions.
By NomadicTax Research Team • 5-8 min read • November 21, 2025
## Foreign Earned Income Exclusion Under Section 911
U.S. citizens and residents working abroad are taxed on worldwide income. But section 911 allows exclusion of foreign earned income—up to **$132,900** for 2025–26—if you meet either the **bona fide residence test** or **physical presence test**, *and* your tax home is in a foreign country.([irs.gov](https://www.irs.gov/newsroom/irs-releases-tax-inflation-adjustments-for-tax-year-2026-including-amendments-from-the-one-big-beautiful-bill?utm_source=openai))
## New Waiver for Time Requirements in Conflict Zones
The IRS issued **Rev. Proc. 2025-17**, expanding waiver eligibility to include countries affected by **war, civil unrest, or similar adverse conditions**, adding **Ukraine, Iraq, Haiti**, and **Bangladesh** for the 2024 tax year. If you were forced out of one of these nations due to conflict, the time-based residency tests may be waived.([irs.gov](https://www.irs.gov/irb/2025-13_IRB?utm_source=openai))
## Practical Considerations & Examples
- **Digital nomads** escaping a conflict will benefit—this waiver means you may still claim FEIE without the standard time thresholds.
- FEIE limits (income thresholds) and qualifying criteria need careful documentation: residence, physical presence, and tax home.
- This doesn’t affect all foreigners—some might still face inclusion of foreign‐source income depending on treaty status and effectivity of laws.
**Example:** Maria, a U.S. citizen, was residing in Ukraine working remotely when conflict escalated in late 2023. Normally, she’d have to satisfy one of the two tests for at least 330 full days (physical percent) or a full calendar year (bona fide). Because of the war, she now qualifies for the waiver under Rev. Proc. 2025-17, making her eligible for the exclusion despite failing the physical presence requirement.
## Action Steps for Expats & Advisors
- Confirm whether your country made the waiver list. For 2024 that includes Ukraine, Iraq, Haiti, Bangladesh.
- Gather travel records, proof of evacuation or forced departure.
- Work with experienced international-tax specialists to manage your residency & treaty implications.
- Plan withholding and estimate payments accordingly—don’t assume automatic exclusion.
**Category:** Digital Nomad
**Tax Home:** US
**Author:** NomadicTax Research Team
**Read Time:** 5-8 min
**Published:** true