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taxpayer. The number of days in your

must complete Part VII of your separate

income. However, special rules apply in

qualifying period that fall within your 2007

Forms 2555.

figuring the amount of your IRA

tax year is 140 (August 14 through

deduction. For details, see Pub. 590,

Community income. The amount of the

December 31, 2007).

Individual Retirement Arrangements

exclusion is not affected by the

(IRAs).

Nontaxable U.S. Government

income-splitting provisions of community

allowances. If you or your spouse

property laws. The sum of the amounts

Foreign taxes. You cannot take a credit

received a nontaxable housing allowance

figured separately for each of you is the

or deduction for foreign income taxes paid

as a military or civilian employee of the

total amount excluded on a joint return.

or accrued on income that is excluded

U.S. Government, see Pub. 54 for

under either of the exclusions.

information on how that allowance may

Part VIII

If all of your foreign earned income is

affect your housing exclusion or

If you claim either of the exclusions, you

excluded, you cannot claim a credit or

deduction.

cannot claim any deduction (including

deduction for the foreign taxes paid or

Line 34. Enter any amount your

moving expenses), credit, or exclusion

accrued on that income.

employer paid or incurred on your behalf

that is definitely related to the excluded

that is foreign earned income included in

If only part of your income is excluded,

income. If only part of your foreign earned

your gross income for the tax year

you cannot claim a credit or deduction for

income is excluded, you must prorate

(without regard to section 911).

the foreign taxes allocable to the

such items based on the ratio that your

excluded income. See Pub. 514, Foreign

Examples of employer-provided

excludable earned income bears to your

Tax Credit for Individuals, for details on

amounts are:

total foreign earned income. See Pub. 54

•

how to figure the amount allocable to the

Wages and salaries received from your

for details on how to figure the amount

excluded income.

employer.

allocable to the excluded income.

•

The fair market value of compensation

The exclusion under section 119 and

Part IX

provided in kind (such as the fair rental

the housing deduction are not considered

value of lodging provided by your

If line 33 is more than line 36 and line 27

definitely related to the excluded income.

employer as long as it is not excluded on

is more than line 43, complete this part to

line 25).

Line 44. Report in full on Form 1040 and

figure your housing deduction. Also,

•

Rent paid by your employer directly to

related forms and schedules all

complete this part to figure your housing

your landlord.

deductions allowed in figuring your

deduction carryover from 2006.

•

Amounts paid by your employer to

adjusted gross income (Form 1040, line

One-year carryover. If the amount on

reimburse you for housing expenses,

37). Enter on line 44 the total amount of

line 46 is more than the amount on line

educational expenses of your

those deductions (such as the deduction

47, you can carry the difference over to

dependents, or as part of a tax

for moving expenses, the deduction for

your 2008 tax year. If you cannot deduct

equalization plan.

one-half of self-employment tax, and the

the excess in 2008 because of the 2008

Self-employed individuals. If all of your

expenses claimed on Schedule C or C-EZ

limit, you cannot carry it over to any future

foreign earned income (Part IV) is

(Form 1040)) that are not allowed

tax year.

self-employment income, skip lines 34

because they are allocable to the

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

excluded income. This applies only to

Paperwork Reduction Act Notice. We

qualify, be sure to complete Part IX.

deductions definitely related to the

ask for the information on this form to

excluded earned income. See Pub. 54 for

carry out the Internal Revenue laws of the

Part VII

details on how to report your itemized

United States. You are required to give us

deductions (such as unreimbursed

Married couples. If both you and your

the information. We need it to ensure that

employee business expenses) that are

spouse qualify for, and choose to claim,

you are complying with these laws and to

allocable to the excluded income.

the foreign earned income exclusion,

allow us to figure and collect the right

figure the amount of the exclusion

IRA deduction. The IRA deduction is

amount of tax.

separately for each of you. You each

not definitely related to the excluded

You are not required to provide the

information requested on a form that is

subject to the Paperwork Reduction Act

unless the form displays a valid OMB

Housing Deduction Carryover

control number. Books or records relating

Worksheet — Line 49

Keep for Your Records

to a form or its instructions must be

retained as long as their contents may

become material in the administration of

1. Enter the amount from your 2006 Form 2555, line 46 . . . . . . . . . .

any Internal Revenue law. Generally, tax

returns and return information are

2. Enter the amount from your 2006 Form 2555, line 48 . . . . . . . . . .

confidential, as required by Internal

Revenue Code section 6103.

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

The average time and expenses

line 49 of your 2007 Form 2555. You do not have any housing

required to complete and file this form will

deduction carryover from 2006 . . . . . . . . . . . . . . . . . . . . . . . . . .

vary depending on individual

circumstances. For the estimated

4. Enter the amount from your 2007 Form 2555, line 47 . . . . . . . . . .

averages, see the instructions for your

5. Enter the amount from your 2007 Form 2555, line 48 . . . . . . . . . .

income tax return.

If you have suggestions for making this

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

form simpler, we would be happy to hear

7. Enter the smaller of line 3 or line 6 here and on line 49 of your 2007

from you. See the instructions for your

income tax return.

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

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

-4-

Instructions For Form 2555 - Foreign Earned Income - Internal Revenue Service - 2007 Page 4

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