New York Tax Lawyers Goldstein Jones HomeDetermination of Housing Cost Amounts Eligible for Exclusion or Deduction for 2007
Notice 2007-77 (10/1/2007)
SECTION 1. PURPOSE
This notice provides adjustments to the
limitation on housing expenses for purposes of section 911 of the Internal Revenue
Code (Code) for specific locations for 2007. These adjustments are made on the basis
of geographic differences in housing costs relative to housing costs in the United
States.
SECTION 2. BACKGROUND
Section 911(a) of the Code allows a
qualified individual to elect to exclude from gross income the foreign earned income
and housing cost amount of such individual. Section 911(c)(1) defines the term
"housing cost amount" as an amount equal to the excess of (A) the housing expenses
of an individual for the taxable year to the extent such expenses do not exceed the
amount determined under section 911(c)(2), over (B) 16 percent of the exclusion
amount(computed on a daily basis) in effect under section 911(b)(2)(D) for the
calendar year in which such taxable year begins ($70.44 per day for 2007, or $85,700
for the full year), multiplied by the number of days of that taxable year within the
applicable period described in section 911(d)(1). The applicable period is the
period during which the individual meets the tax home requirement of section
911(d)(1)and either the bona fide residence requirement of section 911(d)(1)(A)or
the physical presence requirement of section 911(d)(1)(B). Assuming that the entire
taxable year of a qualified individual is within the applicable period, the section
911(c)(1)(B) amount for 2007 is $13,712($85,700 x .16).
