Exclusion amount.   The maximum foreign earned income exclusion has increased to $85,700.

Housing expenses—base amount.   The base housing amount has increased to $37.57 per day, or $13,712 for an entire calendar year.

Income categories eliminated.   The following categories of income have been eliminated for purposes of computing the foreign tax credit limit. Income that previously fell in these categories is either passive category income or general category income.

  For more information, see Publication 514, Foreign Tax Credit for Individuals, or the Instructions for Form 1116, Foreign Tax Credit (Individual, Estate, or Trust).

Carryforward and carryback of unused foreign taxes.   Due to the elimination of the income categories as discussed above, special rules apply to carrybacks of unused foreign taxes to 2006 and carryforwards of unused taxes to 2007 and later years. For more information, see Publication 514 or the Instructions for Form 1116.

Recharacterization of overall domestic loss.   If you have an overall domestic loss for any tax year beginning after 2006, you must recharacterize a portion of your U.S. source taxable income in succeeding years as foreign source taxable income for purposes of the foreign tax credit.

  For more information, see Publication 514 or the Instructions for Form 1116.

Country-by-country reporting no longer required of mutual fund or other regulated investment company (RIC) shareholders.    If you claim a foreign tax credit in 2007 or later years for your share of foreign taxes paid by a mutual fund or other RIC, you no longer have to report the income or taxes paid on a country-by-country basis. See the Instructions for Form 1116.

Exclusion amount.   For 2008, the maximum foreign earned income exclusion has increased to $87,600.

Housing expenses—base amount.   The base housing amount has increased to $38.30 per day, or $14,016 for an entire calendar year.