Form 2555 - Foreign Earned Income

Purpose of Form

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. But if you qualify, use Form 2555 to exclude a limited amount of your foreign earned income. Also, use it to claim the housing exclusion or deduction. You may not exclude or deduct more than your foreign earned income for the tax year. You may be able to use Form 2555-EZ, Foreign Earned Income Exclusion, if none of your foreign earned income was from self-employment, your total foreign earned income did not exceed $108,700 (for 2021), you do not have any business or moving expenses, and you do not claim the housing exclusion or deduction.

Foreign country 

A foreign country is any territory (including the air space, territorial waters, seabed, and subsoil) under the sovereignty of a government other than the United States. It does not include U.S. possessions or territories.

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.

Who Qualifies 

You qualify for the tax benefits available to taxpayers who have foreign earned income if both 1 and 2 apply.

1. You meet the tax home test.

2. You meet either the bona fide residence test or the physical presence test.

Note: If your only earned income from work abroad is pay you received from the U.S. Government as its employee, you do not qualify for either of the exclusions or the housing deduction. Do not file Form 2555.

For more information see Form 2555