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Income received in prior year. Foreign

If capital is not an income-producing

cooperative housing, the cost of buying or

earned income received in 2008 for

factor and personal services produced the

improving a house, principal payments on

services you performed in 2009 can be

business income, the 30% rule does not

a mortgage, or depreciation on the house.

excluded from your 2008 gross income if,

apply. Your entire gross income is earned

Also, do not include the cost of domestic

income.

labor, pay television, or the cost of buying

and to the extent, the income would have

furniture or accessories.

been excludable if you had received it in

Line 25. Enter the value of meals and/or

2009. To claim the additional exclusion,

Include expenses for housing only

lodging provided by, or on behalf of, your

you must amend your 2008 tax return. To

during periods for which:

employer that is excludable from your

•

do this, file Form 1040X.

The value of your housing is not

income under section 119. To be

excluded from gross income under

excludable, the meals and lodging must

Income earned in prior year. Foreign

section 119 (unless you maintained a

have been provided for your employer’s

earned income received in 2009 for

second foreign household as defined

convenience and on your employer’s

services you performed in 2008 can be

later), and

business premises. In addition, you must

excluded from your 2009 gross income if,

•

You meet the tax home test and either

have been required to accept the lodging

and to the extent, the income would have

the bona fide residence or physical

as a condition of your employment. If you

been excludable if you had received it in

presence test.

lived in a camp provided by, or on behalf

2008.

of, your employer, the camp may be

Second foreign household. If you

considered part of your employer’s

If you are excluding income under this

maintained a separate foreign household

business premises. See Exclusion of

rule, do not include this income in Part IV.

for your spouse and dependents at a

Meals and Lodging in Pub. 54 for details.

Instead, attach a statement to Form 2555

place other than your tax home because

showing how you figured the exclusion.

the living conditions at your tax home

Part VI

Enter the amount that would have been

were dangerous, unhealthful, or otherwise

excludable in 2008 on Form 2555 to the

adverse, you can include the expenses of

Line 28. Enter the total reasonable

left of line 45. Next to the amount enter

the second household on line 28.

expenses paid or incurred during the tax

“Exclusion of Income Earned in 2008.”

Married couples. The following rules

year by you, or on your behalf, for your

Include it in the total reported on line 45.

apply if both you and your spouse qualify

foreign housing and the housing of your

for the tax benefits of Form 2555.

spouse and dependents if they lived with

Note. If you claimed any deduction,

you. You can also include the reasonable

Same foreign household. If you and

credit, or exclusion on your 2008 return

expenses of a second foreign household

your spouse lived in the same foreign

that is definitely related to the 2008

(defined later). Housing expenses are

household and file a joint return, you must

foreign earned income you are excluding

considered reasonable to the extent they

figure your housing amounts (line 33)

under this rule, you may have to amend

are not lavish or extravagant under the

jointly. If you file separate returns, only

your 2008 income tax return to adjust the

circumstances.

one spouse can claim the housing

amount you claimed. To do this, file Form

exclusion or deduction.

1040X.

Housing expenses include rent, utilities

In figuring your housing amount

(other than telephone charges), real and

Line 20. If you engaged in an

jointly, either spouse (but not both) can

personal property insurance,

unincorporated trade or business in which

claim the housing exclusion or housing

nonrefundable fees paid to obtain a lease,

both personal services and capital were

deduction. However, if you and your

rental of furniture and accessories,

material income-producing factors, a

residential parking, and household

spouse have different periods of

reasonable amount of compensation for

residence or presence, and the one with

repairs. You can also include the fair

your personal services will be considered

the shorter period of residence or

rental value of housing provided by, or on

earned income. The amount treated as

presence claims the exclusion or

behalf of, your employer if you have not

earned income, however, cannot be more

deduction, you can claim as housing

excluded it on line 25.

than 30% of your share of the net profits

expenses only the expenses for that

from the trade or business after

Do not include deductible interest and

shorter period. The spouse claiming the

subtracting the deduction for one-half of

taxes, any amount deductible by a

exclusion or deduction can aggregate the

self-employment tax.

tenant-stockholder in connection with

housing expenses of both spouses,

subject to the limit on housing expenses

(line 29b), and subtract his or her base

housing amount.

Limit on Housing Expenses

Separate foreign households. If you

Worksheet — Line 29b

Keep for Your Records

and your spouse lived in separate foreign

households, you each can claim qualified

expenses for your own household only if:

•

Note. If the location in which you incurred housing expenses is not listed in the table

Your tax homes were not within a

beginning on page 5, and the number of days in your qualifying period that fall within the

reasonable commuting distance of each

other, and

2009 tax year is 365, DO NOT complete this worksheet. Instead, enter $27,420 on line 29b.

•

Each spouse’s household was not

within a reasonable commuting distance

1. Enter the number of days in your qualifying period that fall within the

of the other spouse’s tax home.

2009 tax year (see the instructions for line 31) . . . . . . . . . . . . . . .

Otherwise, only one spouse can claim

his or her housing exclusion or deduction.

2. Did you enter 365 on line 1?

This is true even if you and your spouse

No. If the amount on line 1 is less than 365, skip line 2 and go to

file separate returns.

line 3.

See Pub. 54 for additional information.

Line 29a. Enter the city or other location

Yes. Locate the amount under the column Limit on Housing

(if applicable) and the country where you

Expenses (full year) from the table beginning on page 5 for the

incurred foreign housing expenses during

location in which you incurred housing expenses. This is your

the tax year only if your location is listed

limit on housing expenses. Enter the amount here and on

in the table beginning on page 5;

line 29b.

otherwise, leave this line blank.

STOP

Line 29b. Your housing expenses may

Do not complete the rest of this worksheet . . . . . . . . . . . .

not exceed a certain limit. The limit on

housing expenses varies depending upon

3. Enter the amount under the column Limit on Housing Expenses

the location in which you incur housing

(daily) from the table beginning on page 5 for the location in which

expenses. In 2009, for most locations,

you incurred housing expenses. If the location is not listed in the

this limit is $27,420 (30 percent of

table, enter $75.12 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$91,400) if your qualifying period includes

all of 2009 (or $75.12 per day if the

4. Multiply line 1 by line 3. This is your limit on housing expenses.

number of days in your qualifying period

Enter the result here and on line 29b . . . . . . . . . . . . . . . . . . . . .

that fall within your 2009 tax year is less

than 365).

-3-

Instructions for Form 2555 (2009)

Instructions For Form 2555 - Foreign Earned Income - Internal Revenue Service - 2009 Page 3

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