Specific Instructions

Lines 1a and 1b

Bona Fide Residence Test

To meet this test, you must be one of the following:

  • A U.S. citizen who is a bona fide resident of a foreign country, or countries, for an uninterrupted period that includes an entire tax year (January 1–December 31), or

  • A U.S. resident alien who is a citizen or national of a country with which the United States has an income tax treaty in effect and who is a bona fide resident of a foreign country, or countries, for an uninterrupted period that includes an entire tax year (January 1–December 31). See Pub. 901, U.S. Tax Treaties, for a list of countries with which the United States has an income tax treaty in effect.

Whether you are a bona fide resident of a foreign country depends on your intention about the length and nature of your stay. Evidence of your intention may be your words and acts. If these conflict, your acts carry more weight than your words. Generally, if you go to a foreign country for a definite, temporary purpose and return to the United States after you accomplish it, you are not a bona fide resident of the foreign country. If accomplishing the purpose requires an extended, indefinite stay, and you make your home in the foreign country, you may be a bona fide resident. See Pub. 54 for more information and examples.

If you submitted a statement of nonresidence to the authorities of a foreign country in which you earned income and the authorities hold that you are not subject to their income tax laws by reason of nonresidency in the foreign country, you are not considered a bona fide resident of that country.

If you submitted such a statement and the authorities have not made an adverse determination of your nonresident status, you are not considered a bona fide resident of that country.

Line 1b.   If you answered “Yes” on line 1a, enter the dates your bona fide residence began and ended. If you are still a bona fide resident, enter “Continues” in the space for the date your bona fide residence ended.

Lines 2a and 2b

Physical Presence Test

To meet this test, you must be a U.S. citizen or resident alien who is physically present in a foreign country, or countries, for at least 330 full days during any period of 12 months in a row. A full day means the 24-hour period that starts at midnight.

Line 2a.   To figure 330 full days of presence, add all separate periods you were present in a foreign country during the 12-month period in which those days occurred. The 330 full days can be interrupted by periods when you are traveling over international waters or are otherwise not in a foreign country. See Pub. 54 for more information and examples.

Line 2b.   The 12-month period on which the physical presence test is based must include 365 days, part of which must be in 2014. The dates may begin or end in a calendar year other than 2014.

  
You must enter dates in both spaces provided on line 2b. Do not enter “Continues” in the space for the ending date.

Note.   A nonresident alien who, with a U.S. citizen or U.S. resident alien spouse, chooses to be taxed as a resident of the United States can qualify under this test if the time requirements are met. See Pub. 54 for details on how to make this choice.

Line 3

Tax Home Test

To meet this test, your tax home must be in a foreign country, or countries (see Foreign country, earlier), throughout your period of bona fide residence or physical presence, whichever applies. For this purpose, your period of physical presence is the 330 full days during which you were present in a foreign country, not the 12 consecutive months during which those days occurred.

Your tax home is your regular or principal place of business, employment, or post of duty, regardless of where you maintain your family residence. If you do not have a regular or principal place of business because of the nature of your trade or business, your tax home is your regular place of abode (the place where you regularly live).

You are not considered to have a tax home in a foreign country for any period during which your abode is in the United States. However, if you are temporarily present in the United States, or you maintain a dwelling in the United States (whether or not that dwelling is used by your spouse and dependents), it does not necessarily mean that your abode is in the United States during that time.

Example.   You are employed on an offshore oil rig in the territorial waters of a foreign country and work a 28-day on/28-day off schedule. You return to your family residence in the United States during your off periods. You are considered to have an abode in the United States and do not meet the tax home test. You cannot claim the foreign earned income exclusion.

Line 4

Enter your entire address including city, province or state, country, and postal code. If using a military or diplomatic address, include the country in which you are living or stationed.

Line 12

Complete columns (a) through (d) if you were present in the United States or any of its possessions in 2014. Do not include time spent in the United States or its possessions before your period of bona fide residence or physical presence, whichever applies, began or after it ended.

Column (d).   Enter, in U.S. dollars, the amount of income earned in the United States on business (such as meetings or conventions). Attach a statement showing how you determined the amount. Do not include this income on line 17. Even if you live and work in a foreign country, any income earned during the time spent in the United States on business is considered U.S. source income and cannot be excluded.

Line 14

Enter the number of days in your qualifying period that fall within 2014. Your qualifying period is the period during which you meet the tax home test and either the bona fide residence test or the physical presence test.

Example.   You establish a tax home and bona fide residence in a foreign country on August 14, 2014. You maintain the tax home and residence until January 31, 2016. The number of days in your qualifying period that fall within 2014 is 140 (August 14 through December 31, 2014).

Line 17

Enter the total foreign earned income you earned and received in 2014. Report the amount in U.S. dollars using the exchange rates in effect when you actually received the income. If you are a cash-basis taxpayer, include in income on Form 1040 the foreign earned income you received in 2014 regardless of when you earned it. (For example, include wages on Form 1040, line 7.)

Income is earned in the year you performed the services for which you received the pay. But if you received your last wage or salary payment for 2013 in 2014 because of your employer's payroll period, that income can be treated as earned in 2014. If you cannot treat that wage or salary payment as earned in 2014, the rules explained later under Income earned in prior year apply. See Pub. 54 for more details.

Note.

If your total foreign earned income entered on line 17 is over $99,200, do not file Form 2555-EZ. You must file Form 2555 instead.

Foreign earned income.   For purposes of this form, foreign earned income means only the following types of income received for personal services you performed in a foreign country during the period for which you meet the tax home test and either the bona fide residence test or the physical presence test.
  • Wages, salaries, tips, and bonuses.

  • Noncash income (such as a home or car) if reported as income on Form 1040, line 7.

  • Allowances or reimbursements if reported as income on Form 1040, line 7.

  Foreign earned income does not include:
  • Income earned in the United States on business (Form 2555-EZ, line 12, column (d)),

  • Amounts paid to you by the U.S. Government or any of its agencies if you were an employee of the U.S. Government or any of its agencies,

  • Amounts that are actually a distribution of corporate earnings or profits rather than a reasonable allowance as compensation for your personal services,

  • Amounts received after the end of the tax year following the tax year in which you performed the services, or

  • Amounts you must include in gross income because of your employer's contributions to a nonexempt employees' trust or to a nonqualified annuity contract.

Income earned in prior year.   Foreign earned income received in 2014 for services you performed in 2013 can be excluded from your 2014 gross income if, and to the extent, the income would have been excludable if you had received it in 2013.

  If you are excluding income under this rule, do not include this income on line 17. Instead, attach a statement to Form 2555-EZ showing how you figured the exclusion. Enter the amount that would have been excludable in 2013 on Form 2555-EZ to the left of line 18. Next to the amount enter “Exclusion of Income Earned in 2013.” Include it in the total reported on line 18.

Note.   If you claimed any deduction, credit, or exclusion on your 2013 return that is definitely related to the 2013 foreign earned income you are excluding under this rule, you may have to amend your 2013 income tax return to adjust the amount claimed. To do this, file Form 1040X.


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