Foreign Earned Income ExclusionSelf-employed persons may claim the foreign income exclusion on self-employment income. This will reduce the federal income tax, but it will not reduce the self-employment tax.
Foreign Housing Deduction for Self-Employed PersonsSelf-employed persons working abroad do not qualify for the foreign housing exclusion. Instead they can deduct allowable housing expenses under the foreign housing deduction. The foreign housing deduction is calculated on Form 2555 Part VI and IX. The foreign housing deduction reduces the federal income tax, but does not reduce the self-employment tax.