Form 2555 - Foreign Earned Income
As a U.S. citizen or resident alien living and working abroad, you may be eligible to exclude a certain amount of foreign earned income from your U.S. taxes. This is where Federal Form 2555 comes in – a crucial document that helps you claim the Foreign Earned Income Exclusion (FEIE) and the Foreign Housing Exclusion or Deduction. In this post, we'll delve into the purpose of Form 2555, who needs to file it, and how to complete it accurately.
What is Form 2555 used for?
Form 2555 is used to claim the FEIE, which allows qualifying individuals to exclude a certain amount of foreign earned income from their U.S. taxes. The form is also used to claim the Foreign Housing Exclusion or Deduction, which allows individuals to exclude or deduct certain housing expenses from their foreign earned income.
Who needs to file Form 2555?
You need to file Form 2555 if you meet the following conditions:
- You are a U.S. citizen or resident alien
- You live and work abroad
- You have foreign earned income
- You want to claim the FEIE and/or the Foreign Housing Exclusion or Deduction
How to complete Form 2555
Completing Form 2555 requires careful attention to detail and accurate calculations. Here's a step-by-step guide to help you complete the form:
- Gather necessary documents: Collect your foreign earned income statements, housing expense records, and any other relevant documents.
- Determine your qualifying period: Determine the period during which you lived and worked abroad and earned foreign income.
- Calculate the FEIE: Use the instructions provided with Form 2555 to calculate the FEIE, which is the amount of foreign earned income that can be excluded from your U.S. taxes.
- Calculate the Foreign Housing Exclusion or Deduction: Use the instructions provided with Form 2555 to calculate the Foreign Housing Exclusion or Deduction, which is the amount of housing expenses that can be excluded or deducted from your foreign earned income.