  Traditionally, the effects of interstellar extinction on binary star light
curves have been treated as a uniform reduction in the observed brightness of
the system that is independent of orbital phase. However, unless the orbital
plane of the system coincides with the plane of the sky, or if the two stars
are completely identical and present with minimal mutual irradiation and
tidal/rotational distortions, then this is unlikely to be an accurate
representation of the effect of interstellar extinction. Here, we present an
updated treatment of interstellar extinction as incorporated in the PHOEBE 2.2
release (publicly available from http://phoebe-project.org) and assess the
importance of using such an approach in the modeling of different types of
binary systems. We also present the incorporation of PHOENIX model atmospheres
into the PHOEBE 2.2 release, providing increased fidelity on computed
observables down to lower temperatures than previously available. The
importance of these new code developments is then highlighted via an extincted
toy model of the eclipsing white-dwarf-subdwarf binary SDSS~J235524.29+044855.7
-- demonstrating that, in the age of LSST as well as complementary space-based
photometric missions, a proper accounting for extinction and as well as the use
of realistic model atmospheres will be essential in deriving accurate binary
parameters.
