You must attach either a Form 2555 or Form 2555-EZ to your US tax return in order to claim Foreign Earned income Exclusion (FEIE). FEIE allows US taxpayers to exclude up to $101,300 on their tax return.
A Form 2555 is a three-page form that is comprised of nine sections, addressing different aspects of the FEIE. This form can be extremely complex and hard to navigate. The form 2555-EZ is comparatively simple, however you must fall into the following criteria for to file the form-
· Be a US citizen or resident alien
· Earn less that $100,800 for 2015 or $101,300 for 2016 wages in a foreign country.
· File a US return covering a calendar year
· Don’t plan to claim Foreign Housing Exclusion or deduction
· Don’t have business or moving expenses associated with your position of employment
How to prepare to file a Form 2555-EZ/2555?
Keeping detailed and accurate records throughout the tax year can be extremely beneficial when you come to fill in the form. You should know the following information:
· Employer’s name and address
· International travel calendar- including date you have worked in the US
· Prior year From 2555-EZ/2555
· Foreign income earnings statements
Part 1: Determining if you can claim Foreign Earned Income Exclusion (FEIE)
To claim FEIE you must qualify in either the Bona Fide Residence Test or Physical Presence Test.
Part 2: General Information
The knowledge needed to answer this section is often self-explanatory