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Foreign Earned Income Exclusion - Which Form to File

Form 2555 and Form 2555-EZ

Form 2555 can be used to claim the foreign earned income exclusion. It must be used to claim the foreign housing exclusion or deduction. In some circumstances you can use Form 2555-EZ to claim the foreign earned income exclusion (see below).

You must attach Form 2555 to your Form 1040 or 1040X if you claim the foreign housing exclusion or the foreign housing deduction. If you cannot use Form 2555-EZ, you must attach Form 2555 if you claim the foreign earned income exclusion. 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. Do not submit Form 2555 or Form 2555-EZ by itself. See the instructions for the forms if you are not sure about the information requested.

Form 2555-EZ

If you are claiming either the foreign housing exclusion or the foreign housing deduction, you must use Form 2555, not Form 2555-EZ. Form 2555 shows how you qualify for the bona fide residence test or physical presence test, how much of your earned income is excluded, and how to figure the amount of your allowable housing exclusion or deduction.

Form 2555-EZ is a form that has fewer lines than Form 2555. You can use this form if all seven of the following apply:

  • You are a U.S. citizen or a resident alien
  • Your total foreign earned income for the year is not more than the maximum foreign earned income exclusion for the corresponding tax year (for the limits on the excludable amount, see Figuring the Foreign Earned Income Exclusion)
  • You have earned wages/salaries in a foreign country
  • You are filing a calendar year return that covers a 12-month period
  • You did not have any self-employment income for the year
  • You did not have any business or moving expenses for the year
  • You are not claiming the foreign housing exclusion or deduction

Form 2555

If you claim exclusion under the bona fide residence test, be sure to enter the type of visa under which you entered the foreign country and the period of your bona fide residence in Part II. Frequently, these items are overlooked.

If you claim exclusion under the physical presence test, be sure to insert the beginning and ending dates of your 12-month period and the dates of your arrivals and departures, as requested in the travel schedule in Part III.

You must fill out Part VI if you are claiming a foreign housing exclusion or deduction.  If you are claiming the foreign earned income exclusion, fill out Part VII. If you are claiming the foreign earned income exclusion, the foreign housing exclusion, or both, fill out Part VIII.  Finally, if you are claiming the foreign housing deduction, fill out Part IX.

If you and your spouse both qualify to claim the foreign earned income exclusion, the foreign housing exclusion, or the foreign housing deduction, you and your spouse must file separate Forms 2555 to claim these benefits.

Form 673 - Reduce Your Withholding

Your employer is not required to withhold U.S. income tax from the portion of your wages earned abroad that is equal to the foreign earned income exclusion and foreign housing exclusion if your employer has good reason to believe that you will qualify for these exclusions.

You can give a statement to your employer indicating that you will meet either the bona fide residence test or the physical presence test and indicating your estimated housing cost exclusion.

Form 673, Statement for Claiming Exemption From Withholding on Foreign Earned Income Eligible for the Exclusions Provided by Section 911, is an acceptable statement. You can use Form 673 only if you are a U.S. citizen. Resident aliens are not allowed to file Form 673. You do not have to use the form. You can prepare your own statement.

Give the statement to your employer and not to the IRS.

For additional information, refer to the Income Tax Withholding section in Chapter 2 of Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad.

References/Related Topics

Page Last Reviewed or Updated: 16-Aug-2013