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2006

Department of the Treasury

Internal Revenue Service

Instructions for Form

2555-EZ

Foreign Earned Income Exclusion

•

You do not have a housing deduction

embassies and consulates or by writing

General Instructions

carryover from 2005.

to: National Distribution Center, P.O. Box

•

You meet either the bona fide

8903, Bloomington, IL 61702-8903. You

Do not include on Form 1040, line

residence test (see the instructions for

can also download this publication (as

64 (federal income tax withheld),

lines 1a and 1b on page 2) or the physical

well as other forms and publications) from

any taxes a foreign employer

CAUTION

presence test (see the instructions for

the IRS website at

withheld from your pay and paid to the

lines 2a and 2b on page 2).

•

foreign country’s tax authority instead of

Waiver of Time

You meet the tax home test (see the

to the U.S. Treasury.

instructions for line 3 on page 2).

Requirements

Foreign country. A foreign country is

What’s New for 2006

If your tax home was in a foreign country

any territory (including the airspace,

and you were a bona fide resident of, or

Exclusion amount. The maximum

territorial waters, seabed, and subsoil)

physically present in, a foreign country

foreign earned income exclusion is now

under the sovereignty of a government

and had to leave because of war, civil

adjusted annually for inflation. For 2006,

other than the United States.

unrest, or similar adverse conditions, the

the maximum exclusion has increased to

The term “foreign country” does not

minimum time requirements specified

$82,400.

include U.S. possessions or territories. It

under the bona fide residence and

does not include the Antarctic region.

Figuring tax on income not excluded.

physical presence tests may be waived.

If you claim the foreign earned income

Note. If your only earned income from

You must be able to show that you

exclusion or housing exclusion, you must

work abroad is pay you received from the

reasonably could have expected to meet

figure the tax on your nonexcluded

U.S. Government as its employee, you do

the minimum time requirements if you had

income using the tax rates that would

not qualify for the foreign earned income

not been required to leave. Each year the

have applied had you not claimed the

exclusion. Do not file Form 2555-EZ.

IRS will publish in the Internal Revenue

exclusions. See the Instructions for Form

Bulletin a list of countries and the dates

Married Couples

1040 and complete the Foreign Earned

they qualify for the waiver. If you left one

If both you and your spouse qualify for,

Income Tax Worksheet to figure the

of the countries during the period

and choose to claim, the foreign earned

amount of tax to enter on Form 1040, line

indicated, you can claim the foreign

income exclusion, figure the amount of

44. When figuring your alternative

earned income exclusion on Form

the exclusion separately for each of you.

minimum tax on Form 6251, you must

2555-EZ, but only for the number of days

You must each complete separate Forms

use the Foreign Earned Income Tax

you were a bona fide resident of, or

2555-EZ.

Worksheet in the instructions for Form

physically present in, the foreign country.

6251.

Community income. The amount of the

If you can claim the foreign earned

exclusion is not affected by the

income exclusion because of the waiver

Purpose of Form

income-splitting provisions of community

of time requirements, attach a statement

property laws. The sum of the amounts

If you qualify, you can use Form 2555-EZ

to your return explaining that you

figured separately for each of you is the

instead of Form 2555, Foreign Earned

expected to meet the applicable time

total amount excluded on a joint return.

Income, to exclude a limited amount of

requirement, but the conditions in the

your foreign earned income. You cannot

Travel to Cuba

foreign country prevented you from the

exclude more than your foreign earned

normal conduct of business. Also, enter

Generally, if you were in Cuba in violation

income for the year.

“Claiming Waiver” in the top margin on

of U.S. travel restrictions, the following

page 1 of your 2006 Form 2555-EZ.

U.S. citizens and U.S. resident aliens

rules apply.

•

living in a foreign country are subject to

Any time spent in Cuba cannot be

When To File

the same U.S. income tax laws that apply

counted in determining if you qualify

to citizens and resident aliens living in the

Form 1040 is generally due April 16,

under the bona fide residence or physical

United States.

2007.

presence test.

•

Any income earned in Cuba is not

Note. Specific rules apply to determine if

However, you are automatically

considered foreign earned income.

you are a resident or nonresident alien of

granted a 2-month extension of time to

the United States. See Pub. 519, U.S.

Note. If you performed services at the

file (to June 15, 2007) if, on the due date

Tax Guide for Aliens, for details.

U.S. Naval Base at Guantanamo Bay,

of your return, you live outside the United

you were not in violation of U.S. travel

States and Puerto Rico and your tax

Who Qualifies

restrictions.

home (defined later) is outside the United

States and Puerto Rico. If you take this

You can use Form 2555-EZ to claim the

Additional Information

extension, you must attach a statement to

foreign earned income exclusion if all of

your return explaining that you meet

the following apply.

Pub. 54, Tax Guide for U.S. Citizens and

•

these two conditions.

You meet the seven conditions listed at

Resident Aliens Abroad, has more

the top of Form 2555-EZ.

information about the bona fide residence

The automatic 2-month extension also

•

Your total foreign earned income

test, the physical presence test, and the

applies to paying the tax. However,

received in 2006 is reported on Form

foreign earned income exclusion. You can

interest is charged on the unpaid tax from

1040, line 7.

get this publication from most U.S.

the regular due date until it is paid.

Cat. No. 14623P

Instructions For Form 2555-Ez - Foreign Earned Income Exclusion - Internal Revenue Service - 2006

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