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either the bona fide residence test or the

Noncash income (such as a home or

that is definitely related to the 2005

physical presence test.

car) if reported as income on Form 1040,

foreign earned income you are excluding

line 7.

under this rule, you may have to amend

Example. You establish a tax home and

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Allowances or reimbursements if

your 2005 income tax return to adjust the

bona fide residence in a foreign country

reported as income on Form 1040, line 7.

amount claimed. To do this, file Form

on August 14, 2006. You maintain the tax

1040X.

home and residence until January 31,

Foreign earned income does not

2008. The number of days in your

include:

Paperwork Reduction Act Notice. We

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qualifying period that fall within 2006 is

Amounts from line 12, column (d),

ask for the information on this form to

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140 (August 14 through December 31,

Amounts paid to you by the U.S.

carry out the Internal Revenue laws of the

2006).

Government or any of its agencies if you

United States. You are required to give us

were an employee of the U.S.

the information. We need it to ensure that

Line 17

Government or any of its agencies,

you are complying with these laws and to

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Amounts that are actually a distribution

Enter the total foreign earned income you

allow us to figure and collect the right

of corporate earnings or profits rather

earned and received in 2006. Report the

amount of tax.

than a reasonable allowance as

amount in U.S. dollars using the

You are not required to provide the

compensation for your personal services,

exchange rates in effect when you

information requested on a form that is

actually received the income. Be sure to

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subject to the Paperwork Reduction Act

Amounts received after the end of the

report on Form 1040 all income you

unless the form displays a valid OMB

tax year following the tax year in which

received in 2006 regardless of when you

control number. Books or records relating

you performed the services.

earned it.

to a form or its instructions must be

Income earned in prior year. Foreign

Income is earned in the year you

retained as long as their contents may

earned income received in 2006 for

performed the services for which you

become material in the administration of

services you performed in 2005 can be

received the pay. But if you received your

any Internal Revenue law. Generally, tax

excluded from your 2006 gross income if,

last wage or salary payment for 2005 in

returns and return information are

and to the extent, the income would have

2006 because of your employer’s payroll

confidential, as required by Internal

been excludable if you had received it in

period, that income may be treated as

Revenue Code section 6103.

2005.

earned in 2006. If you cannot treat that

The average time and expenses

wage or salary payment as earned in

If you are excluding income under this

required to complete and file this form will

2006, the rules explained later under

rule, do not include this income on line

vary depending on individual

Income earned in prior year apply. See

17. Instead, attach a statement to Form

circumstances. For the estimated

Pub. 54 for more details.

2555-EZ showing how you figured the

averages, see the instructions for your

exclusion. Enter the amount that would

Foreign earned income. For purposes

income tax return.

have been excludable in 2005 on Form

of this form, foreign earned income

If you have suggestions for making this

2555-EZ to the left of line 18. Next to the

means only the following types of income

form simpler, we would be happy to hear

amount enter “Exclusion of Income

received for personal services you

from you. See the instructions for your

Earned in 2005.” Include it in the total

performed in a foreign country during the

income tax return.

reported on line 18.

period for which you meet the tax home

Note. If you claimed any deduction,

test and either the bona fide residence

credit, or exclusion on your 2005 return

test or the physical presence test.

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Wages, salaries, tips, and bonuses.

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Instructions For Form 2555-Ez - Foreign Earned Income Exclusion - Internal Revenue Service - 2006 Page 3

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