Note.

Specific rules apply to determine if you are a resident or nonresident alien of the United States. See Pub. 519.

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" doesn't include U.S. possessions or territories. It doesn't include the Antarctic region.

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, or countries, 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 don't 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 aren't considered to have a tax home in a foreign country for any period during which your abode is in the United States, unless you are serving in support of the U.S. Armed Forces in an area designated as a combat zone. See Service in a combat zone, later. Otherwise, if your abode is in the United States, you will not meet the tax home test and cannot claim the foreign earned income exclusion.

The location of your abode is based on where you maintain your family, economic, and personal ties. Your abode is not necessarily in the United States merely because you maintain a dwelling in the United States, whether or not your spouse and dependents use the dwelling. Your abode is not necessarily in the United States while you are temporarily in the United States. However, these factors can contribute to your having an abode in the United States.

When to claim the exclusion(s).

The first year you plan to take the foreign earned income exclusion and/or the housing exclusion or deduction, 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:

Additional child tax credit.

You can't take the additional child tax credit if you claim either of the exclusions or the housing deduction.

Earned income credit.

You can't take the earned income credit if you claim either of the exclusions or the housing deduction.

Foreign tax credit or deduction.

You can't take a credit or deduction for foreign income taxes paid or accrued on income that is excluded under either of the exclusions. If all of your foreign earned income is excluded, you can't claim a credit or deduction for the foreign taxes paid or accrued on that income. If only part of your income is excluded, you can't claim a credit or deduction for the foreign taxes allocable to the excluded income. See Pub. 514 for details on how to figure the amount allocable to the excluded income.

IRA deduction.

If you claim either of the exclusions, special rules apply in figuring the amount of your IRA deduction. For details, see Pub. 590-A.

Line 1.

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

Line 9.

Enter your tax home(s) and date(s) established. See Tax home test under Who Qualifies, earlier.

Line 28.

Enter the total reasonable expenses paid or incurred during the tax year by you, or on your behalf, for your foreign housing and the housing of your spouse and dependents if they lived with you. You can also include the reasonable expenses of a second foreign household (defined later). Housing expenses are considered reasonable to the extent they aren't lavish or extravagant under the circumstances.

Housing expenses include rent, utilities (other than telephone charges), real and personal property insurance, nonrefundable fees paid to obtain a lease, rental of furniture and accessories, residential parking, and household repairs. You can also include the fair rental value of housing provided by, or on behalf of, your employer if you haven't excluded it on line 25.

Don't include deductible interest and taxes, any amount deductible by a tenant-stockholder in connection with cooperative housing, the cost of buying or improving a house, principal payments on a mortgage, or depreciation on the house. Also, don't include the cost of domestic labor, pay television, or the cost of buying furniture or accessories.

Include expenses for housing only during periods for which:

Second foreign household.

If you maintained a separate foreign household for your spouse and dependents at a place other than your tax home because the living conditions at your tax home were dangerous, unhealthful, or otherwise adverse, you can include the expenses of the second household on line 28.

Married couples.

The following rules apply if both you and your spouse qualify for the tax benefits of Form 2555.

Line 29a.

Enter the city or other location (if applicable) and the country where you incurred foreign housing expenses during the tax year only if your location is listed in the table at the end of the instructions; otherwise, leave this line blank.

Line 29b.

Your housing expenses may not exceed a certain limit. The limit on housing expenses varies depending upon the location in which you incur housing expenses. In 2020, for most locations, this limit is $32,280 (30% of $107,600) if your qualifying period includes all of 2020 (or $88.20 per day if the number of days in your qualifying period that fall within your 2020 tax year is less than 366).

The table at the end of the instructions lists the housing expense limits based on geographic differences in foreign housing costs relative to housing costs in the United States. If the location in which you incurred housing expenses is listed in the table, or the number of days in your qualifying period that fall within the 2020 tax year is less than 366, use the Limit on Housing Expenses Worksheet, earlier, to figure the amount to enter on line 29b. If the location in which you incurred housing expenses is not listed in the table, and the number of days in your qualifying period is 366, enter $32,280 on line 29b.

Limit on Housing Expenses Worksheet—Line 29b

Note. If the location in which you incurred housing expenses isn't listed in the table at the end of the instructions, and the number of days in your qualifying period that fall within the 2020 tax year is 366, DO NOT complete this worksheet. Instead, enter $32,280 on line 29b.
1.	Enter the number of days in your qualifying period that fall within the 2020 tax year. (See the instructions for line 31)		1.	_____
2.	Did you enter 366 on line 1?
	No. If the amount on line 1 is less than 366, skip line 2 and go to line 3.
	Yes. Locate the amount under the column Limit on Housing Expenses (full year) from the table at the end of the instructions for the location in which you incurred housing expenses. This is your limit on housing expenses. Enter the amount here and on line 29b. Also, see Election to apply higher limit on housing expenses, later. Do not complete the rest of this worksheet		2.	_____
3.	Enter the amount under the column Limit on Housing Expenses (daily) from the table at the end of the instructions for the location in which you incurred housing expenses. If the location isn't listed in the table, enter $88.20. Also, see Election to apply higher limit on housing expenses, later		3.	_____
4.	Multiply line 1 by line 3. This is your limit on housing expenses. Enter the result here and on line 29b		4.	_____

Line 31.

Enter the number of days in your qualifying period that fall within your 2020 tax year. Your qualifying period is the period during which you meet the tax home test and either the bona fide residence or the physical presence test.

Nontaxable U.S. Government allowances.

If you or your spouse received a nontaxable housing allowance as a military or civilian employee of the U.S. Government, see Pub. 54 for information on how that allowance may affect your housing exclusion or deduction.

Line 34.

Enter any amount your employer paid or incurred on your behalf that is foreign earned income included in your gross income for the tax year (without regard to section 911).

Examples of employer-provided amounts are the following.

Self-employed individuals.

If all of your foreign earned income (Part IV) is self-employment income, skip lines 34 and 35 and enter -0- on line 36. If you qualify for the housing deduction, be sure to complete Part IX.

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 each must complete Part VII of your separate Forms 2555.

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.

Line 44.

Report in full on Schedule 1 (Form 1040) and related forms and schedules all deductions allowed in figuring your adjusted gross income (Form 1040, line 11). Enter on line 44 the total amount of those deductions (such as the deductible part of self-employment tax, and the expenses claimed on Schedule C (Form 1040)) that aren't allowed because they are allocable to the excluded income. This applies only to deductions definitely related to the excluded earned income. See Pub. 54 for details on how to report your itemized deductions that are allocable to the excluded income.

Line 45.

Enter the amount from line 45 in parentheses as a negative number on Schedule 1 (Form 1040), line 8, Other income. In the blank space next to line 8, enter "Form 2555." Reduce the other items of additional income by the negative amount on line 8 and enter the total on Schedule 1 (Form 1040), line 9.

Enter the amount from line 9 of Schedule 1 (Form 1040) on line 8 of Form 1040 or 1040-SR. If line 9 of Schedule 1 (Form 1040) is a negative number, enter it on line 8 of Form 1040 or 1040-SR in parentheses. Reduce the total of lines 1 through 7 of Form 1040 or 1040-SR by this amount before reporting total income on line 9 of Form 1040 or 1040-SR.

Line 49.

Use the Housing Deduction Carryover Worksheet above to figure your carryover from 2019.

One-year carryover.

If the amount on line 46 is more than the amount on line 47, you can carry the difference over to your 2021 tax year. If you cannot deduct the excess in 2021 because of the 2021 limit, you cannot carry it over to any future tax year.