Foreign Earned Income Exclusion
You may claim the foreign income exclusion on self-employment income. This will reduce your regular income tax, but it will not reduce your Self-Employment Tax.
Housing Deduction for Self-Employed Persons
Self-employed persons working abroad do not qualify for the foreign housing exclusion. Instead you can deduct your allowable housing expenses from your gross income. The housing deduction is calculated on Form 2555 Part VI and IX. The deduction is then reported on Form 1040 Line 36 and you write "Form 2555" on the dotted lines next to the line. The Foreign Housing Deduction reduces your regular tax liability, but does not reduce your Self-Employment Tax liability.
More Information:
Foreign Earned Income Exclusion: Overview
Bona Fide Residence Test & Physical Presence Test
Maximum Exclusion & Prorated Exclusion
Foreign Housing Exclusion and Deduction
