Instructions For Form 2555 (Page 3 of 4) in pdf

and to the extent, the income would have

are not lavish or extravagant under the

1. Your tax homes were not within a

been excludable if you had received it in

circumstances.

reasonable commuting distance of each

2004. To claim the additional exclusion,

other, and

Housing expenses include rent, utilities

you must amend your 2003 tax return. To

2. Each spouse’s household was not

(other than telephone charges), real and

do this, file Form 1040X.

within a reasonable commuting distance

personal property insurance,

of the other spouse’s tax home.

nonrefundable fees paid to obtain a lease,

Income earned in prior year. Foreign

rental of furniture and accessories,

earned income received in 2004 for

Otherwise, only one spouse can claim

residential parking, and household

services you performed in 2003 can be

his or her housing exclusion or deduction.

repairs. You can also include the fair

excluded from your 2004 gross income if,

This is true even if you and your spouse

rental value of housing provided by, or on

and to the extent, the income would have

file separate returns.

behalf of, your employer if you have not

been excludable if you had received it in

See Pub. 54 for additional information.

excluded it on line 25.

2003.

Line 29. Enter the number of days in

Do not include deductible interest and

If you are excluding income under this

your qualifying period that fall within your

taxes, any amount deductible by a

rule, do not include this income in Part IV.

2004 tax year. Your qualifying period is

tenant-stockholder in connection with

Instead, attach a statement to Form 2555

the period during which you meet the tax

cooperative housing, the cost of buying or

showing how you figured the exclusion.

home test and either the bona fide

improving a house, principal payments on

Enter the amount that would have been

residence or the physical presence test.

a mortgage, or depreciation on the house.

excludable in 2003 on Form 2555 to the

Example. You establish a tax home

Also, do not include the cost of domestic

left of line 43. Next to the amount enter

and bona fide residence in a foreign

labor, pay television, or the cost of buying

“Exclusion of Income Earned in 2003.”

country on August 14, 2004. You maintain

furniture or accessories.

Include it in the total reported on line 43.

the tax home and residence until January

Include expenses for housing only

Note. If you claimed any deduction,

31, 2006. You are a calendar year

during periods for which:

credit, or exclusion on your 2003 return

taxpayer. The number of days in your

•

The value of your housing is not

that is definitely related to the 2003

qualifying period that fall within your 2004

excluded from gross income under

foreign earned income you are excluding

tax year is 140 (August 14 through

section 119 (unless you maintained a

under this rule, you may have to amend

December 31, 2004).

second foreign household as defined

your 2003 income tax return to adjust the

Nontaxable U.S. Government

below), and

amount you claimed. To do this, file Form

•

allowances. If you or your spouse

You meet the tax home test and either

1040X.

received a nontaxable housing allowance

the bona fide residence or physical

Line 20. If you engaged in an

as a military or civilian employee of the

presence test.

unincorporated trade or business in which

U.S. Government, see Pub. 54 for

Second foreign household. If you

both personal services and capital were

information on how that allowance may

maintained a separate foreign household

material income-producing factors, a

affect your housing exclusion or

for your spouse and dependents at a

reasonable amount of compensation for

deduction.

place other than your tax home because

your personal services will be considered

Line 32. Enter any amount your

the living conditions at your tax home

earned income. The amount treated as

employer paid or incurred on your behalf

were dangerous, unhealthful, or otherwise

earned income, however, cannot be more

that is foreign earned income included in

adverse, you can include the expenses of

than 30% of your share of the net profits

your gross income for the tax year

the second household on line 28.

from the trade or business after

(without regard to section 911).

Married couples. The following rules

subtracting the deduction for one-half of

Examples of employer-provided

apply if both you and your spouse qualify

self-employment tax.

amounts are:

for the tax benefits of Form 2555:

•

If capital is not an income-producing

Wages and salaries received from your

If you and your spouse lived in the

factor and personal services produced the

employer.

•

same foreign household and file a joint

business income, the 30% rule does not

The fair market value of compensation

return, you can figure your housing

apply. Your entire gross income is earned

provided in kind (such as the fair rental

amounts (line 31) either separately or

income.

value of lodging provided by your

jointly. If you file separate returns, you

employer as long as it is not excluded on

Line 25. Enter the value of meals and/or

must figure your housing amounts

line 25).

lodging provided by, or on behalf of, your

•

separately. In figuring your housing

Rent paid by your employer directly to

employer that is excludable from your

amounts separately, you can allocate

your landlord.

income under section 119. To be

•

your qualified housing expenses (line 28)

Amounts paid by your employer to

excludable, the meals and lodging must

between yourselves in any proportion you

reimburse you for housing expenses,

have been provided for your employer’s

wish, but each spouse claiming a housing

educational expenses of your

convenience and on your employer’s

amount must use his or her full base

dependents, or as part of a tax

business premises. In addition, you must

amount housing amount (line 30). In

equalization plan.

have been required to accept the lodging

figuring your housing amount jointly,

Self-employed individuals. If all of your

as a condition of your employment. If you

either spouse (but not both) can claim the

foreign earned income (Part IV) is

lived in a camp provided by, or on behalf

housing exclusion or housing deduction.

self-employment income, skip lines 32

of, your employer, the camp may be

However, if you and your spouse have

and 33 and enter -0- on line 34. If you

considered part of your employer’s

different periods of residence or presence

qualify, be sure to complete Part IX.

business premises. See Exclusion of

and the one with the shorter period of

Meals and Lodging in Pub. 54 for details.

residence or presence claims the

Part VII

exclusion or deduction, you can claim as

Part VI

housing expenses only the expenses for

Married couples. If both you and your

that shorter period. The spouse claiming

spouse qualify for, and choose to claim,

Line 28. Enter the total reasonable

the exclusion or deduction can aggregate

the foreign earned income exclusion, the

expenses paid or incurred during the tax

the housing expenses of both spouses

amount of the exclusion is figured

year by you, or on your behalf, for your

and subtract his or her base housing

separately for each of you. You each

foreign housing and the housing of your

amount.

must complete Part VII of your separate

spouse and dependents if they lived with

Forms 2555.

you. You can also include the reasonable

If you and your spouse lived in

expenses of a second foreign household

separate foreign households, you each

Community income. The amount of the

(defined below). Housing expenses are

can claim qualified expenses for your own

exclusion is not affected by the

considered reasonable to the extent they

household only if:

income-splitting provisions of community

-3-

Instructions For Form 2555 Page 3

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