Yes so lets's say (just as an example - not using my real income here Mods ) my total wages from W-2 work in 2023 was $110,000 and in my case I was able to take the FEIE for January through August. What the IRS does is take that FEIE as an "Additional Income" entry on the Tax Return Transcript in a negative amount and subtract it from the total wages. In my hypothetical case for those 8 months, they would have subtracted $74,609 from my $110,000 wages, leaving me with a total income of $35,391 (which is what they then tax). But that did take a big chunk out of my "Total Income" bringing me down closer to the minimum amount that I would have liked. And yes, for a 2 person household, 125% is about $26.5K/year. The big thing is, proving current income is just as important (with paystubs, employment verification letter). That's the amount you put for the "My current individual annual income" part.