General Instructions

Do not include on Form 1040, line 64 (federal income tax withheld), any taxes an employer withheld from your pay and paid to the foreign country's tax authority instead of to the U.S. Treasury.

Purpose of Form

If you qualify, you can use Form 2555-EZ instead of Form 2555, Foreign Earned Income, to figure your foreign earned income exclusion. You cannot exclude more than your foreign earned income for the year.

General Information

If you are a U.S. citizen or a U.S. resident alien living in a foreign country, you are subject to the same U.S. income tax laws that apply to citizens and resident aliens living in the United States.

Note.   Specific rules apply to determine if you are a resident or nonresident alien of the United States. See Pub. 519, U.S. Tax Guide for Aliens, for details.

Foreign country.   A foreign country is any territory under the sovereignty of a government other than that of the United States.

  The term “foreign country” includes the country's territorial waters and airspace, but not international waters and the airspace above them. It also includes the seabed and subsoil of those submarine areas adjacent to the country's territorial waters over which it has exclusive rights under international law to explore and exploit the natural resources.

  The term “foreign country ” does not include U.S. possessions or territories. It does not include the Antarctic region.

Who Qualifies

You can use Form 2555-EZ to claim the foreign earned income exclusion if all of the following apply.

  • You meet the seven conditions listed at the top of Form 2555-EZ.

  • Your total foreign earned income received in 2014 is reported on Form 1040, line 7.

  • You do not have a housing deduction carryover from 2013.

  • You meet either the bona fide residence test (see the instructions for lines 1a and 1b, later) or the physical presence test (see the instructions for lines 2a and 2b, later).

  • You meet the tax home test (see the instructions for line 3, later).

Note.   Income from working abroad as an employee of the U.S. Government does not qualify for the foreign earned income exclusion. Do not file Form 2555-EZ.

Married Couples

If both you and your spouse qualify for, and choose to claim, the foreign earned income exclusion, figure the amount of the exclusion separately for each of you. You must each complete separate Forms 2555-EZ.

Community income.   The amount of the exclusion is not affected by the income-splitting provisions of community property laws. The sum of the amounts figured separately for each of you is the total amount excluded on a joint return.

Travel to Cuba

Generally, if you were in Cuba in violation of U.S. travel restrictions, the following rules apply.

  • Any time spent in Cuba cannot be counted in determining if you qualify under the bona fide residence or physical presence test.

  • Any income earned in Cuba is not considered foreign earned income.

Note.

If you performed services at the U.S. Naval Base at Guantanamo Bay, you were not in violation of U.S. travel restrictions.

Additional Information

Pub. 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad, has more information about the bona fide residence test, the physical presence test, and the foreign earned income exclusion. You can get this publication from most U.S. Embassies and consulates or by writing to: National Distribution Center, 1201 N. Mitsubishi Motorway, Bloomington, IL 61705-6613. You can also download this publication (as well as other forms and publications) at IRS.gov.

Waiver of Time Requirements

If your tax home was in a foreign country and you were a bona fide resident of, or physically present in, a foreign country and had to leave because of war, civil unrest, or similar adverse conditions, the minimum time requirements specified under the bona fide residence and physical presence tests may be waived. You must be able to show that you reasonably could have expected to meet the minimum time requirements if you had not been required to leave. Each year the IRS will publish in the Internal Revenue Bulletin a list of the only countries that qualify for the waiver for the previous year and the dates they qualify. If you left one of the countries during the period indicated, you can claim the foreign earned income exclusion on Form 2555-EZ, but only for the number of days you were a bona fide resident of, or physically present in, the foreign country.

If you can claim the foreign earned income exclusion because of the waiver of time requirements, attach a statement to your return explaining that you expected to meet the applicable time requirement, but the conditions in the foreign country prevented you from the normal conduct of business. Also, enter “Claiming Waiver” in the top margin on page 1 of your Form 2555-EZ.

When To File

Form 1040 is generally due April 15, 2015.

However, you are automatically granted a 2-month extension of time to file (to June 15, 2015) if, on the due date of your return, you live outside the United States and Puerto Rico and your tax home (defined later) is outside the United States and Puerto Rico. If you take this extension, you must attach a statement to your return explaining that you meet these two conditions.

The automatic 2-month extension also applies to paying the tax. However, interest is charged on the unpaid tax from the regular due date until it is paid.

When to claim the exclusion(s).   The first year you plan to take the foreign earned income exclusion, you may not yet have met either the physical presence test or the bona fide residence test by the due date of your return (including the automatic 2-month extension, discussed earlier). If this occurs, you can either:
  1. Apply for a special extension to a date after you expect to qualify, or

  2. File your return timely without claiming the exclusion and then file an amended return after you qualify.

Special extension of time.

To apply for this extension, complete and file Form 2350, Application for Extension of Time To File U.S. Income Tax Return, with the Department of the Treasury, Internal Revenue Service Center, Austin, TX 73301-0045, before the due date of your return. Interest is charged on the tax not paid by the regular due date as explained earlier.

Amended return.

File Form 1040X, Amended U.S. Individual Income Tax Return, to change a return you already filed. Generally, Form 1040X must be filed within 3 years after the date the original return was filed or within 2 years after the date the tax was paid, whichever is later.

Where To File

Attach Form 2555-EZ to Form 1040 when filed. Mail your Form 1040 to one of the special addresses designated for those filing Form 2555 or Form 2555-EZ. Do not mail your Form 1040 to the addresses associated with your state of residence if Form 2555 or Form 2555-EZ is attached. See the Instructions for Form 1040. The filing addresses are also available at www.irs.gov/uac/INTERNATIONAL-Where-to-File-Form-1040,-1040A,-and-1040EZ-Addresses-for-Taxpayers-and-Tax-Professionals.

Choosing the Exclusion

To choose the foreign earned income exclusion, complete the appropriate parts of Form 2555-EZ and file it with your Form 1040 or Form 1040X. Your initial choice to claim the exclusion must usually be made on a timely filed return (including extensions) or on a return amending a timely filed return. However, there are exceptions. See Pub. 54 for more information.

Once you choose to claim the exclusion, that choice remains in effect for that year and all future years unless it is revoked. To revoke your choice, you must attach a statement to your return for the first year you do not wish to claim the exclusion. If you revoke your choice, you cannot claim the exclusion for your next 5 tax years without the approval of the Internal Revenue Service. See Pub. 54 for details.

Figuring tax on income not excluded.   If you claim the foreign earned income exclusion, you must figure the tax on your nonexcluded income using the tax rates that would have applied had you not claimed the exclusion. See the Instructions for Form 1040 and complete the Foreign Earned Income Tax Worksheet to figure the amount of tax to enter on Form 1040, line 44. When figuring your alternative minimum tax on Form 6251, you must use the Foreign Earned Income Tax Worksheet in the instructions for Form 6251.

Earned income credit.   You cannot take the earned income credit if you claim the exclusion.

Foreign tax credit or deduction.   You cannot claim a credit or deduction for foreign income taxes paid on income you exclude. If all of your foreign earned income is excluded, you cannot claim a credit or deduction for the foreign taxes paid on that income. If only part of your income is excluded, you cannot claim a credit or deduction for the foreign taxes allocable to the excluded income. For details on how to figure the amount allocable to the excluded income, see Pub. 514, Foreign Tax Credit for Individuals.

IRA deduction.   If you claim the exclusion, special rules apply in figuring the amount of your IRA deduction. For details, see Pub. 590, Individual Retirement Arrangements (IRAs).


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