There is much confusion about what constitutes foreign earned income with respect to the residency location, the location where the work or service is performed, and the source of the salary or fee fee. Foreign residency or extended periods abroad of the tax payer is often a qualification to avoid double taxation. A personal exemption reduces your taxable income so you find yourself paying lower taxes. You may well be even luckier if the exemption brings you a new lower income tax bracket.
For the year 2010 it is $3650 per person, just like last year’s amount. In 2008, the number of was $3,500. It is indexed yearly for rising cost of living. 
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