What Is a IRS Form 2555?

What Is a IRS Form 2555?

Form 2555. Form 2555 shows how you qualify for the bona fide residence test or physical presence test, how much of your foreign earned income is excluded, and how to figure the amount of your allowable foreign housing exclusion or deduction.

What is foreign income on tax return?

More In File For this purpose, foreign earned income is income you receive for services you perform in a foreign country in a period during which your tax home is in a foreign country and you meet either the bona fide residence test or the physical presence test.

Where does foreign income go on tax return?

Generally, you report your foreign income where you normally report your U.S. income on your tax return. Earned income (wages) is reported on line 7 of Form 1040; interest and dividend income is reported on Schedule B; income from rental properties is reported on Schedule E, etc.

Is form 2555 mandatory?

You need to file IRS form 2555 if you want to claim the foreign earned income exclusion. You can claim an exclusion for income you earned abroad if you qualify under the bona fide residence test or the physical presence test and if you have a foreign tax home.

What form do I report foreign income?

If you qualify, you can use Form 2555 to figure your foreign earned income exclusion and your housing exclusion or deduction. You cannot exclude or deduct more than your foreign earned income for the year.

Where to put foreign income on 1040?

Generally, you report your foreign income where you normally report your U.S. income on your tax return. Earned income (wages) is reported on line 7 of Form 1040; interest and dividend income is reported on Schedule B; income from rental properties is reported on Schedule E, etc.

What is foreign earned income tax?

The foreign earned income exclusion prevents double taxation by excluding the income from U.S, taxation. The United States will tax your income earned worldwide. However, if you are an American expat, this means you are taxed twice on this income. The income you receive overseas, sees the foreign country tax, and can be taxed again by the IRS.

How do I qualify for foreign earned income exclusion?

To qualify for the foreign earned income exclusion, people must live and work in a foreign country for at least a year.

What is overseas income exemption?

The most commonly known and claimed overseas tax exemption for US expats is called the Foreign Earned Income Exclusion. The Foreign Earned Income Exclusion allows expats to exclude the first around $100,000 (the exact figure rises a little each year in line with inflation) of their earned income from US taxation.