Form 2555: How to exclude foreign income on your taxes

Form 2555 is one of the tax forms you’ll want to get familiar with if you’re an American working and living overseas. It’s the form that lets you claim the Foreign Earned Income Exclusion, which (if you qualify for it) can save you a lot of headaches and a lot of money come tax season. Below, we’ll dive into the basics of Form 2555, including why it exists, who files it, and a quick run-through of how to do it.

Between all the different acronyms and form numbers, taxes as an expat can be confusing—that’s why we’re here to guide you through the process! Taxes are tricky and filing the wrong form can lead to all sorts of trouble. Let us do the hard work with our expat tax services so you can get back to your life.

Form 2555 being used to claim the foreign earned income exclusion

What is the purpose of Form 2555?

Most countries implement some sort of tax on income earned within their borders. The U.S. is the same way. What’s different about the U.S., though, is that the U.S. taxes income based on citizenship and residency—meaning you still have to pay taxes on income you earned abroad.

To help protect Americans earning income abroad from being double-taxed (once by the U.S. and once by the country in which they earned the income), the U.S. government created foreign tax credits, deductions, and exclusions expats can claim. One of these ways is allowing certain American expats to claim the foreign earned income exclusion. Tax form 2555 is the form you use to figure out and claim the foreign earned income exclusion and housing exclusion or deduction.

If you’re unsure if you should file Form 2555 to claim the foreign income exclusion or Form 1116 to claim the foreign tax credit, don’t go it alone—trust the experts at H&R Block to handle filing your expat taxes.

Who needs to file Form 2555?

You need to file IRS form 2555 if you want to claim the foreign earned income exclusion. You can claim an exclusion for income you earned abroad if you qualify under the bona fide residence test or the physical presence test and if you have a foreign tax home.

Form 2555 instructions

Your Form 2555 instructions can be found on the IRS’ website, but because making a mistake can cost you (literally), we recommend you leave it to a seasoned tax pro to do all this work for you.

Need help with Form 2555, the Foreign Earned Income Exclusion? Trust the tax experts at H&R Block

Taxes aren’t simple, and that’s why we at H&R Block work round the clock to do them for you. Because each person’s tax situation is different, our experts will find the best tax solutions for you, saving you money and time in the process. Get started with our expat tax services today!