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Self-employed individuals. If all of your

$92,900) if your qualifying period includes

in your qualifying period that fall within the

all of 2011 (or $76.36 per day if the

2011 tax year (that is, the number of days

foreign earned income (Part IV) is

number of days in your qualifying period

entered on Form 2555, line 31).

self-employment income, skip lines 34

that fall within your 2011 tax year is less

and 35 and enter -0- on line 36. If you

Line 31. Enter the number of days in

than 365).

qualify for the housing deduction, be sure

your qualifying period that fall within your

to complete Part IX.

The table beginning on page 5 lists the

2011 tax year. Your qualifying period is

housing expense limits based on

the period during which you meet the tax

Part VII

geographic differences in foreign housing

home test and either the bona fide

costs relative to housing costs in the

residence or the physical presence test.

Married couples. If both you and your

United States. If the location in which you

spouse qualify for, and choose to claim,

Example. You establish a tax home

incurred housing expenses is listed in the

the foreign earned income exclusion,

and bona fide residence in a foreign

table, or the number of days in your

figure the amount of the exclusion

country on August 14, 2011. You maintain

qualifying period that fall within the 2011

separately for each of you. You each

the tax home and residence until January

tax year is less than 365, use the Limit on

must complete Part VII of your separate

31, 2013. You are a calendar year

Housing Expenses Worksheet on page 3

Forms 2555.

taxpayer. The number of days in your

to figure the amount to enter on line 29b.

qualifying period that fall within your 2011

Community income. The amount of the

If the location in which you incurred

tax year is 140 (August 14 through

housing expenses is not listed in the

exclusion is not affected by the

December 31, 2011).

table, and the number of days in your

income-splitting provisions of community

qualifying period is 365, enter $27,870 on

Nontaxable U.S. Government

property laws. The sum of the amounts

allowances. If you or your spouse

figured separately for each of you is the

line 29b.

total amount excluded on a joint return.

received a nontaxable housing allowance

Example. For 2011, because your

as a military or civilian employee of the

location is not listed in the table beginning

Part VIII

U.S. Government, see Pub. 54 for

on page 5, your limit on housing

information on how that allowance may

expenses is $76.36 per day ($27,870

If you claim either of the exclusions, you

affect your housing exclusion or

divided by 365). If you file a calendar year

cannot claim any deduction (including

deduction.

return and your qualifying period is

moving expenses), credit, or exclusion

January 1, 2011, to October 1, 2011 (274

Line 34. Enter any amount your

that is definitely related to the excluded

days), you would enter $20,923 on line

employer paid or incurred on your behalf

income. If only part of your foreign earned

29b ($76.36 multiplied by 274 days).

that is foreign earned income included in

income is excluded, you must prorate

More than one foreign location. If

your gross income for the tax year

such items based on the ratio that your

you moved during the 2011 tax year and

(without regard to section 911).

excludable earned income bears to your

incurred housing expenses in more than

total foreign earned income. See Pub. 54

Examples of employer-provided

one foreign location as a result, complete

for details on how to figure the amount

amounts are:

the Limit on Housing Expenses

allocable to the excluded income.

•

Wages and salaries received from your

Worksheet on page 3 for each location in

employer.

The exclusion under section 119 and

which you incurred housing expenses,

•

The fair market value of compensation

the housing deduction are not considered

entering the number of qualifying days

provided in kind (such as the fair rental

definitely related to the excluded income.

during which you lived in the applicable

value of lodging provided by your

location on line 1. Add the results shown

Line 44. Report in full on Form 1040 and

employer as long as it is not excluded on

on line 4 of each worksheet, and enter the

related forms and schedules all

line 25).

total on line 29b.

deductions allowed in figuring your

•

Rent paid by your employer directly to

adjusted gross income (Form 1040, line

If you moved during the 2011 tax

your landlord.

37). Enter on line 44 the total amount of

•

year and are completing more

Amounts paid by your employer to

those deductions (such as the deduction

than one Limit on Housing

reimburse you for housing expenses,

CAUTION

for moving expenses, the deduction for

Expenses Worksheet, the total number of

educational expenses of your

the employer-equivalent portion of

days entered on line 1 of your worksheets

dependents, or as part of a tax

self-employment tax, and the expenses

may not exceed the total number of days

equalization plan.

claimed on Schedule C or C-EZ (Form

1040)) that are not allowed because they

are allocable to the excluded income.

This applies only to deductions definitely

related to the excluded earned income.

Housing Deduction Carryover

See Pub. 54 for details on how to report

Worksheet—Line 49

Keep for Your Records

your itemized deductions (such as

unreimbursed employee business

expenses) that are allocable to the

excluded income.

1. Enter the amount from your 2010 Form 2555, line 46 . . . . . . . . . .

Part IX

2. Enter the amount from your 2010 Form 2555, line 48 . . . . . . . . . .

If line 33 is more than line 36 and line 27

3. Subtract line 2 from line 1. If the result is zero, stop; enter -0- on

is more than line 43, complete this part to

figure your housing deduction.

line 49 of your 2011 Form 2555. You do not have any housing

deduction carryover from 2010 . . . . . . . . . . . . . . . . . . . . . . . . . .

Line 49. Use the housing deduction

carryover worksheet on this page to figure

4. Enter the amount from your 2011 Form 2555, line 47 . . . . . . . . . .

your carryover from 2010.

5. Enter the amount from your 2011 Form 2555, line 48 . . . . . . . . . .

One-year carryover. If the amount on

line 46 is more than the amount on line

6. Subtract line 5 from line 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

47, you can carry the difference over to

your 2012 tax year. If you cannot deduct

7. Enter the smaller of line 3 or line 6 here and on line 49 of your 2011

the excess in 2012 because of the 2012

Form 2555. If line 3 is more than line 6, you cannot carry the

limit, you cannot carry it over to any future

difference over to any future tax year . . . . . . . . . . . . . . . . . . . . .

tax year.

-4-

Instructions for Form 2555 (2011)

Instructions For Form 2555 - Foreign Earned Income - Internal Revenue Service - 2011 Page 4

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