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Part VII

35). Enter on line 42 the total amount of

how to figure the amount allocable to the

those deductions (such as the deduction

excluded income.

Married couples. If both you and your

for moving expenses, the deduction for

spouse qualify for, and choose to claim,

Part IX

one-half of self-employment tax, and the

the foreign earned income exclusion, the

expenses claimed on Schedule C or C-EZ

If line 31 is more than line 34 and line 27

amount of the exclusion is figured

(Form 1040)) that are not allowed

is more than line 41, complete this part to

separately for each of you. You each

because they are allocable to the

figure your housing deduction. Also,

must complete Part VII of your separate

excluded income. This applies only to

complete this part to figure your housing

Forms 2555.

deductions definitely related to the

deduction carryover from 2001.

Community income. The amount of the

excluded earned income. See Pub. 54 for

One-year carryover. If the amount on

exclusion is not affected by the

details on how to report your itemized

line 44 is more than the amount on line

income-splitting provisions of community

deductions (such as unreimbursed

45, you may carry the difference over to

property laws. The sum of the amounts

employee business expenses) that are

your 2003 tax year. If you cannot deduct

figured separately for each of you is the

allocable to the excluded income.

the excess in 2003 because of the 2003

total amount excluded on a joint return.

IRA deduction. The IRA deduction is not

limit, you may not carry it over to any

definitely related to the excluded income.

future tax year.

Part VIII

However, special rules apply in figuring

If you claim either of the exclusions, you

the amount of your IRA deduction. For

Paperwork Reduction Act Notice. We

may not claim any deduction (including

details, see Pub. 590, Individual

ask for the information on this form to

moving expenses), credit, or exclusion

Retirement Arrangements (IRAs).

carry out the Internal Revenue laws of the

that is definitely related to the excluded

Foreign taxes. You may not take a credit

United States. You are required to give us

income. If only part of your foreign earned

or deduction for foreign income taxes paid

the information. We need it to ensure that

income is excluded, you must prorate

or accrued on income that is excluded

you are complying with these laws and to

such items based on the ratio that your

under either of the exclusions.

allow us to figure and collect the right

excludable earned income bears to your

If all of your foreign earned income is

amount of tax.

total foreign earned income. See Pub. 54

excluded, you may not claim a credit or

You are not required to provide the

for details on how to figure the amount

deduction for the foreign taxes paid or

information requested on a form that is

allocable to the excluded income.

accrued on that income.

subject to the Paperwork Reduction Act

The exclusion under section 119 and

If only part of your income is excluded,

unless the form displays a valid OMB

the housing deduction are not considered

you may not claim a credit or deduction

control number. Books or records relating

definitely related to the excluded income.

for the foreign taxes allocable to the

to a form or its instructions must be

Line 42. Report in full on Form 1040 and

excluded income. See Pub. 514, Foreign

retained as long as their contents may

related forms and schedules all

Tax Credit for Individuals, for details on

become material in the administration of

deductions allowed in figuring your

any Internal Revenue law. Generally, tax

adjusted gross income (Form 1040, line

returns and return information are

confidential, as required by section 6103.

Housing Deduction Carryover Worksheet — Line 47

The time needed to complete and file

Keep for Your Records

this form will vary depending on individual

circumstances. The estimated average

time is:

1 Enter the amount from your 2001 Form 2555, line 44 . . . . . . . . . . .

Recordkeeping . . . . . . .

1 hr., 52 min.

2 Enter the amount from your 2001 Form 2555, line 46 . . . . . . . . . . .

Learning about the law

or the form . . . . . . . . . .

26 min.

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

Preparing the form . . . .

1 hr., 47 min.

47 of your 2002 Form 2555. You do not have any housing deduction

Copying, assembling,

carryover from 2001 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

and sending the form to

the IRS . . . . . . . . . . . . .

49 min.

4 Enter the amount from your 2002 Form 2555, line 45 . . . . . . . . . . .

If you have comments concerning the

5 Enter the amount from your 2002 Form 2555, line 46 . . . . . . . . . . .

accuracy of these time estimates or

suggestions for making this form simpler,

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

we would be happy to hear from you. See

the Instructions for Form 1040.

7 Enter the smaller of line 3 or line 6 here and on line 47 of your 2002

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

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

-4-

Instructions For Form 2555 - Foreign Earned Income - Internal Revenue Service - 2002 Page 4

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