Updated July 29, 2026. Quick answer: No, and the reason is definitional rather than a matter of degree. IRC §911 excludes foreign earned income, and earned income means amounts received for personal services actually performed. Dividends, interest, capital gains and rents are not compensation for services, so they never enter the definition. The exclusion is not a shelter for a portfolio.
The definition is the whole answer
IRC §911(b)(1)(A) builds foreign earned income out of amounts received for services performed in a foreign country, and §911(b)(1)(B) then lists categories expressly outside it. Because the base definition is services-linked, investment income is not excluded by an exception — it was never in scope to begin with. That distinction matters when you read advice suggesting a portfolio can be sheltered by moving: there is no provision to invoke.
What §911 does supply, and it is load-bearing elsewhere. §911(d)(1) defines a “qualified individual” as one “whose tax home is in a foreign country” and who meets a residence or presence test. That tax home concept is borrowed by IRC §865 for sourcing gains, so §911 governs your investment income indirectly — through the definition it lends, not through the exclusion it grants. That chain is where the sourcing answer actually comes from.
| Income | Inside the exclusion? | Why |
|---|---|---|
| Salary for work performed abroad | Yes | Compensation for personal services |
| Self-employment income from services abroad | Generally yes | Services, subject to the statute’s own limits |
| Dividends and interest | No | Not for services |
| Capital gains | No | Not for services |
| Rents and royalties | No | Not for services |
The practical trap is the sequence, not the rule. Someone who moves abroad, excludes their salary, and concludes their US filing is handled has excluded the one category the provision reaches and left the portfolio fully exposed — to regular tax, and separately to a 3.8% surtax that foreign tax credits cannot touch. The exclusion’s success on wages is what makes the gap on investment income easy to miss.
Separately from what is taxable, there is what must be reported — two different regimes with two different thresholds, and most sources cite the wrong rule for one of them.
Sources
IRC §911(b)(1)(A) and (b)(1)(B), §911(d)(1) and §911(d)(2). Fetched July 2026.
This states what the cited authority says. It is not tax, legal or investment advice. Cross-border tax turns on your citizenship, your tax home, the country you move to and any treaty between it and the United States — none of which a page can see. No filing deadline is stated here; deadlines change and the current instructions govern.