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taxmap/pubs/p54-013.htm#TXMP2781701a Form 2555 and  Form 2555-EZ(p22)

Form 2555 and Form 2555-EZ

If you are claiming the foreign earned income exclusion only, you can use Form 2555. In some circumstances, you can use Form 2555-EZ to claim the foreign earned income exclusion. You must file one of these forms each year you are claiming the exclusion.

If you are claiming either the foreign housing exclusion or the foreign housing deduction, you must use Form 2555. You cannot use Form 2555-EZ. Form 2555 shows how you meet the bona fide residence test or physical presence test, how much of your earned income is excluded, and how to figure the amount of your allowable housing exclusion or deduction.

Do not submit Form 2555 or Form 2555-EZ by itself.

taxmap/pubs/p54-013.htm#TXMP76076a6d Form 2555-EZ(p22)

Foreign Earned Income Exclusion

Form 2555-EZ has fewer lines than Form 2555. You can use this form if all seven of the following apply.

• You are a U.S. citizen or a resident alien.
• Your total foreign earned income for the year is $85,700 or less.
• You have earned wages/salaries in a foreign country.
• You are filing a calendar year return that covers a 12-month period.
• You did not have any self-employment income for the year.
• You did not have any business or moving expenses for the year.
• You are not claiming the foreign housing exclusion or deduction.

taxmap/pubs/p54-013.htm#TXMP28ffd8a4 Form 2555(p22)

Foreign Earned Income

If you claim exclusion under the bona fide residence test, you should fill out Parts I, II, IV, and V of Form 2555. In filling out Part II, be sure to give your visa type and the period of your bona fide residence. Frequently, these items are overlooked.

If you claim exclusion under the physical presence test, you should fill out Parts I, III, IV, and V of Form 2555. When filling out Part III, be sure to insert the beginning and ending dates of your 12-month period and the dates of your arrivals and departures, as requested in the travel schedule.

You must fill out Part VI if you are claiming a foreign housing exclusion or deduction.

Fill out Part IX if you are claiming the foreign housing deduction.

If you are claiming the foreign earned income exclusion, fill out Part VII.

Finally, if you are claiming the foreign earned income exclusion, the foreign housing exclusion, or both, fill out Part VIII

If you and your spouse both qualify to claim the foreign earned income exclusion, the foreign housing exclusion, or the foreign housing deduction, you and your spouse must file separate Forms 2555 to claim these benefits. See the discussion earlier under Separate Households.

taxmap/pubs/p54-013.htm#TXMP6021aa6d Illustrated Example(p22)

Jim and Judy Adams are married and have two dependent children. They are both U.S. citizens and they file a joint U.S. income tax return. Each one has a tax home in a foreign country and each meets the physical presence test for all of 2007. They both can exclude their foreign earned income up to the limit. Their qualified housing expenses are limited to 30% of the maximum foreign earned income exclusion.

Jim is a petroleum engineer. For 2007, his salary, which was entirely from foreign sources was $71,000. In addition, his employer provided him an annual housing allowance of $18,000, which he used to maintain a rented apartment at his tax home in City A, Country X (which is not a high-cost locality), for the period he was not working at remote drilling sites.

At various times during the year, Jim worked at remote oil drilling sites. While he worked at these remote sites, his employer provided him lodging and meals at nearby camps. Satisfactory housing was not available on the open market near these drilling sites, and the lodging was provided in common areas that normally accommodated 10 or more employees and were not available to the general public. The fair market value of the lodging he was provided in these camps was $2,000, and the value of the meals was $1,000.

After he made an adequate accounting, Jim was reimbursed by his employer for part of his travel expenses and other employee business expenses. Jim had $2,500 of unreimbursed employee business expenses for travel, meals, and lodging that were allocable to his foreign earned income.

Because of adverse conditions in Country X, Judy and the children lived in City Y, Country Y (which is not a high-cost locality), where she worked as an executive secretary with a U.S. company. Her earnings from this job were $44,000. These earnings were subject to foreign income tax.

The Adams family rented an apartment in Country Y for Judy and the children. They paid $1,000 a month rent, including utilities, or $12,000 for the year. The Adamses choose to treat the expenses for the apartment as those for a qualified second foreign household. They include the $12,000 Country Y housing expenses with Jim's $18,000 Country X housing expenses. This results in a larger total housing exclusion.

Jim and Judy had taxable U.S. interest income of $7,500 for the year. The Adamses had no other income for the year and do not itemize deductions.

The Adamses report their income and figure their foreign earned income exclusions and foreign housing exclusion, as shown on the accompanying filled-in forms.

First, they list their income on the front of Form 1040. Their combined salaries, including Jim's $18,000 housing allowance, total $133,000. They enter this on line 7. They enter their interest income of $7,500 on line 8a.

At this point, Jim will complete Form 2555 and Judy will complete Form 2555-EZ to figure their foreign earned income and housing exclusions.

taxmap/pubs/p54-013.htm#TXMP23a4782b Jim's Form 2555.(p23)

On Jim's Form 2555, Part IV, he lists his salary on line 19, his housing allowance on line 22e, and the fair market value of meals and lodging provided in camps by his employer on lines 21a and 21b. The entries on lines 21a and 21b are not shown as income on Form 1040. Jim enters the total of these two entries on line 25 of Form 2555.

Jim combines his housing expenses, $18,000, with the qualified expenses for the second household, $12,000, and enters total housing expenses of $30,000 on line 28. His limit on housing expenses is $25,710 (30% of $85,700) because his qualifying period includes all of 2007 and the expenses were not incurred in high-cost localities. Jim enters $25,710 on lines 29b and 30. This is the limit on his housing expenses. He puts a base housing amount of $13,712 on line 32 and subtracts that amount to arrive at a total foreign housing amount of $11,998 on line 33. He figures a housing exclusion of $11,998 on line 36.

Jim figures his foreign earned income exclusion in Part VII of Form 2555. Because his foreign earned income ($89,000) is more than the maximum exclusion of $85,700, he must reduce the income by the housing exclusion. The foreign earned income exclusion on line 42 is $77,002 ($89,000 – $11,998).

When Jim combines this exclusion of $77,002 with his housing exclusion of $11,998, he comes up with a total exclusion of $89,000 in Part VIII.

The Adamses cannot deduct any of Jim's unreimbursed employee business expenses because they are all allocable to excluded income. However, the Adamses are still entitled to the full standard deduction for a married couple filing jointly.

taxmap/pubs/p54-013.htm#TXMP44ef6b4a Judy's Form 2555-EZ.(p23)

Judy completes a Form 2555-EZ to figure her foreign earned income exclusion. Her foreign earned income is less than the maximum excludable amount. On Judy's Form 2555-EZ, Part IV, she lists her salary on line 17. She figures an exclusion of $44,000 on line 18.

The Adamses enter their combined exclusions of $133,000 on line 21, Form 1040. They identify this item to the left of the entry space. Their adjusted gross income on line 37 is $7,500 (their investment income), which does not qualify for exclusion.

taxmap/pubs/p54-013.htm#TXMP3b954c58

Form 1040, Adams  

taxmap/pubs/p54-013.htm#TXMP5d63e21e

Form 2555, page 1 for James Adams  

taxmap/pubs/p54-013.htm#TXMP2d091693

Form 2555, page 2 for James Adams  

taxmap/pubs/p54-013.htm#TXMP2a64d28c

Form 2555, page 3 for James Adams  

taxmap/pubs/p54-013.htm#TXMP4bffb8d7

Form 2555-EZ, Adams  

taxmap/pubs/p54-013.htm#TXMP3cf88841

Form 2555-EZ, Adams  

2007 Limits on Housing Expenses
Country	City or Other Location	Limit on Housing Expenses (daily)	Limit on Housing Expenses (full year)
Argentina	Buenos Aires	120.27	43,900
Australia	Canberra	70.68	25,800
	Melbourne	72.60	26,500
	Perth	109.59	40,000
Austria	Vienna	78.97	28,824
Bahamas, The	Nassau	136.16	49,700
Bahrain		120.55	44,000
Barbados		103.29	37,700
Belgium	Antwerp	98.90	36,100
	Brussels	137.53	50,200
	Gosselies	98.90	36,100
	Hoogbuul	98.90	36,100
	Mons	98.90	36,100
	SHAPE/Chievres	98.90	36,100
Bermuda		197.26	72,000
Bosnia-Herzegovina	Sarajevo	74.52	27,200
Brazil	Brasilia	101.64	37,100
	Rio de Janeiro	96.16	35,100
	Sao Paulo	127.40	46,500
Canada	Calgary	109.04	39,800
	Dartmouth	92.88	33,900
	Edmonton	83.01	30,300
	Halifax	92.88	33,900
	London, Ontario	79.18	28,900
	Montreal	153.97	56,200
	Ottawa	118.90	43,400
	Toronto	126.03	46,000
	Vancouver	122.19	44,600
	Victoria	92.33	33,700
	Winnipeg	80.00	29,200
Chile	Santiago	96.71	35,300
China	Beijing	134.62	49,137
	Hong Kong	313.15	114,300
	Shanghai	156.17	57,001
Colombia	Bogota	148.22	54,100
	All cities other than Bogota and Barranquilla	123.01	44,900
Costa Rica	San Jose	71.78	26,200
Dominican Republic	Santo Domingo	110.96	40,500
Ecuador	Guayaquil	84.38	30,800
	Quito	83.56	30,500
France	Garches	238.90	87,200
	Le Havre	105.48	38,500
	Lyon	149.32	54,500
France (Continued)	Marseille	139.73	51,000
	Montpellier	123.84	45,200
	Paris	238.90	87,200
	Sevres	238.90	87,200
	Suresnes	238.90	87,200
	Versailles	238.90	87,200
Germany	Babenhausen	116.99	42,700
	Bad Aibling	99.73	36,400
	Bad Nauheim	93.42	34,100
	Baumholder	106.58	38,900
	Berlin	143.29	52,300
	Birkenfeld	106.58	38,900
	Boeblingen	127.40	46,500
	Butzbach	91.51	33,400
	Darmstadt	116.99	42,700
	Erlangen	74.25	27,100
	Frankfurt am Main	122.19	44,600
	Friedberg	93.42	34,100
	Fuerth	74.25	27,100
	Garmisch-Partenkirchen	101.10	36,900
	Geilenkirchen	80.27	29,300
	Gelnhausen	126.58	46,200
	Germersheim	88.77	32,400
	Giebelstadt	101.37	37,000
	Giessen	91.51	33,400
	Grafenwoehr	75.89	27,700
	Hanau	126.58	46,200
	Hannover	87.40	31,900
	Heidelberg	116.71	42,600
	Idar-Oberstein	106.58	38,900
	Ingolstadt	125.75	45,900
	Kaiserslautern, Landkreis	130.41	47,600
	Kitzingen	101.37	37,000
	Leimen	116.71	42,600
	Ludwigsburg	127.40	46,500
	Mainz	143.84	52,500
	Mannheim	116.71	42,600
	Munich	125.75	45,900
	Nellingen	127.40	46,500
	Neubruecke	106.58	38,900
	Nuernberg	74.25	27,100
	Ober Ramstadt	116.99	42,700
	Oberammergau	101.10	36,900
	Pirmasens	130.41	47,600
	Rheinau	116.71	42,600
	Schwabach	74.25	27,100
	Schwetzingen	116.71	42,600
	Seckenheim	116.71	42,600
	Sembach	130.41	47,600
	Stuttgart	127.40	46,500
	Wertheim	101.40	37,000
	Wiesbaden	143.84	52,500
	Wuerzburg	101.40	37,000
	Zirndorf	74.25	27,100
	Zweibrueken	130.41	47,600
Germany (Continued)	All cities other than Augsburg, Babenhausen, Bad Aibling, Bad Kreuznach, Bad Nauheim, Baumholder, Berchtesgaden, Berlin, Birkenfeld, Boeblingen, Bonn, Bremen, Bremerhaven, Butzbach, Cologne, Darmstadt, Delmenhorst, Duesseldorf, Erlangen, Flensburg, Frankfurt am Main, Friedberg, Fuerth, Garlstedt, Garmisch-Partenkirchen, Geilenkirchen, Gelnhausen, Germersheim, Giebelstadt, Giessen, Grafenwoehr, Grefrath, Greven, Gruenstadt, Hamburg, Hanau, Handorf, Hannover, Heidelberg, Heilbronn, Herongen, Idar-Oberstein, Ingolstadt, Kaiserslautern, Landkreis, Kalkar, Karlsruhe, Kerpen, Kitzingen, Koblenz, Leimen, Leipzig, Ludwigsburg, Mainz, Mannheim, Moenchen-Gladbach, Muenster, Munich, Nellingen, Neubruecke, Noervenich, Nuernberg, Ober Ramstadt, Oberammergau, Osterholz-Scharmbeck, Pirmasens, Rheinau, Rheinberg, Schwabach, Schwetzingen, Sembach, Stuttgart, Twisteden, Wahn, Wertheim, Wiesbaden, Worms, Wuerzburg, Zirndorf, and Zweibrueken	103.29	37,700
Greece	Athens	94.25	34,400
	Argyroupolis	91.23	33,300
	Elefsis	94.25	34,400
	Ellinikon	94.25	34,400
	Mt. Hortiatis	91.23	33,300
	Mt. Parnis	94.25	34,400
	Mt. Pateras	94.25	34,400
	Nea Makri	94.25	34,400
	Perivolaki	91.23	33,300
	Piraeus	94.25	34,400
	Souda Bay (Crete)	72.88	26,600
	Tanagra	94.25	34,400
	Thessaloniki	91.23	33,300
Guatemala	Guatemala City	103.01	37,600
Holy See, The		159.18	58,100
Hungary	Budapest	89.04	32,500
India	Mumbai	156.19	57,011
	New Delhi	73.75	26,920
Indonesia	Jakarta	103.50	37,776
Ireland	Dublin	80.55	29,400
	Limerick	80.00	29,200
	Shannon Area	80.00	29,200
Italy	Catania	78.63	28,700
	Genoa	103.29	37,700
	Gioia Tauro	85.48	31,200
	La Spezia	103.29	37,700
	Leghorn	99.45	36,300
	Milan	237.53	86,700
	Naples	131.23	47,900
	Pisa	99.45	36,300
	Pordenone-Aviano	109.59	40,000
	Rome	159.18	58,100
	Sardinia	81.37	29,700
	Sigonella	78.63	28,700
	Turin	118.63	43,300
	Verona	75.89	27,700
	Vicenza	110.68	40,400
	All cities other than Avellino, Brindisi, Catania, Florence, Gaeta, Genoa, Gioia Tauro, La Spezia, Leghorn, Milan, Mount Vergine, Naples, Nettuno, Pisa, Pordenone-Aviano, Rome, Sardinia, Sigonella, Turin, Verona, and Vicenza	91.23	33,300
Jamaica	Kingston	112.88	41,200
Japan	Akashi	73.70	26,900
	Atsugi	93.15	34,000
	Camp Zama	93.15	34,000
	Chiba-Ken	93.15	34,000
	Fussa	93.15	34,000
	Gifu	80.00	29,200
	Gotemba	75.07	27,400
	Haneda	93.15	34,000
	Kanagawa-Ken	93.15	34,000
	Komaki	80.00	29,200
	Machida-Shi	93.15	34,000
	Nagoya	103.52	37,786
Japan (Continued)	Okinawa Prefecture	123.56	45,100
	Osaka-Kobe	145.30	53,036
	Sagamihara	93.15	34,000
	Saitama-Ken	93.15	34,000
	Sasebo	73.70	26,900
	Tachikawa	93.15	34,000
	Tokyo	234.79	85,700
	Tokyo-to	99.73	36,400
	Yokohama	131.23	47,900
	Yokosuka	113.42	41,400
	Yokota	93.15	34,000
Korea	Camp Carroll	77.53	28,300
	Camps Market	179.18	65,400
	Chinhae	83.01	30,300
	Chunchon	76.99	28,100
	Colbern	179.18	65,400
	K-16	179.18	65,400
	Kimhae	86.03	31,400
	Kimpo Airfield	179.18	65,400
	Kwangju	82.19	30,000
	Mercer	179.18	65,400
	Munsan	75.62	27,600
	Osan AB	93.42	34,100
	Pusan	86.03	31,400
	Pyongtaek	93.42	34,100
	Seoul	179.18	65,400
	Suwon	179.18	65,400
	Taegu	97.53	35,600
	Tongduchon	75.62	27,600
	Uijongbu	106.85	39,000
	Waegwan	77.53	28,300
	All cities other than Ammo Depot #9, Camp Carroll, Camps Market, Changwon, Chinhae, Chunchon, Colbern, K-16, Kimhae, Kimpo Airfield, Kunsan, Kwangju, Mercer, Munsan, Osan AB, Pusan, Pyongtaek, Seoul, Suwon, Taegu, Tongduchon, Uijongbu, and Waegwan	87.40	31,900
Kuwait	Kuwait City	166.85	60,900
	All cities other than Kuwait City	149.59	54,600
Luxembourg		130.68	47,700
Macedonia	Skopje	96.99	35,400
Malaysia	Kuala Lumpur	131.51	48,000
	All cities other than Kuala Lumpur	92.33	33,700
Malta		108.22	39,500
Mexico	Hermosillo	91.23	33,300
	Mazatlan	81.92	29,900
	Mexico City	116.16	42,400
	Monterrey	108.49	39,600
	All cities other than Ciudad Juarez, Cuernavaca, Guadalajara, Hermosillo, Matamoros, Mazatlan, Merida, Metapa, Mexico City, Monterrey, Nogales, Nuevo Laredo, Tapachula, Tijuana, Tuxtla Gutierrez, and Veracruz	103.84	37,900
Netherlands	Amsterdam	144.93	52,900
	Aruba	98.63	36,000
	Brunssum	90.14	32,900
	Eygelshoven	90.14	32,900
	Hague, The	163.29	59,600
	Heerlen	90.14	32,900
	Hoensbroek	90.14	32,900
	Hulsberg	90.14	32,900
	Kerkrade	90.14	32,900
	Landgraaf	90.14	32,900
	Maastricht	90.14	32,900
	Papendrecht	114.52	41,800
	Rotterdam	114.52	41,800
	Schaesburg	90.14	32,900
	Schinnen	90.14	32,900
	Schiphol	144.93	52,900
	Ypenburg	163.29	59,600
	All cities other than Amsterdam, Aruba, Brunssum, Coevorden, Eygelshoven, The Hague, Heerlen, Hoensbroek, Hulsberg, Kerkrade, Landgraaf, Maastricht, Margraten, Papendrecht, Rotterdam, Schaesburg, Schinnen, Schiphol, and Ypenburg	83.29	30,400
New Zealand	Auckland	97.81	35,700
	Wellington	92.60	33,800
Nicaragua	Managua	87.12	31,800
Norway	Oslo	83.76	30,573
	Stavanger	96.44	35,200
	All cities other than Oslo and Stavanger	98.08	35,800
Panama	Panama City	88.22	32,200
Peru	Lima	74.79	27,300
Philippines	Cavite	98.63	36,000
	Manila	98.63	36,000
Poland		72.33	26,400
Portugal	Alverca	145.48	53,100
	Lajes Field	71.78	26,200
	Lisbon	145.48	53,100
Qatar	Doha	95.30	34,786
Russia	Moscow	249.04	90,900
	Saint Petersburg	113.70	41,500
	Sakhalin Island	212.33	77,500
	Vladivostok	212.33	77,500
	Yekaterinburg	129.86	47,400
Rwanda	Kigali	86.30	31,500
Saudi Arabia	Jeddah	84.02	30,667
	Riyadh	84.02	30,667
Singapore		155.34	56,700
South Africa	Pretoria	110.14	40,200
Spain	Barcelona	108.49	39,600
	Madrid	107.67	39,300
	Rota	92.60	33,800
	Valencia	111.51	40,700
Switzerland	Bern	139.45	50,900
	Geneva	194.25	70,900
	Zurich	107.45	39,219
	All cities other than Bern, Geneva, and Zurich	90.14	32,900
Taiwan	Taipei	122.42	44,685
Thailand	Bangkok	100.27	36,600
Turkey	Ankara	89.04	32,500
	Elmadag	89.04	32,500
	Izmir-Cigli	86.58	31,600
	Manzarali	89.04	32,500
	Yamanlar	86.58	31,600
Ukraine	Kiev	89.98	32,844
United Arab Emirates	Abu Dhabi	84.07	30,687
	Dubai	116.31	42,452
United Kingdom	Basingstoke	112.60	41,099
	Bath	112.33	41,000
	Bracknell	170.14	62,100
	Bristol	106.03	38,700
	Cambridge	117.81	43,000
	Caversham	202.19	73,800
	Cheltenham	128.22	46,800
	Chicksands	72.60	26,500
	Croughton	105.75	38,600
	Fairford	108.77	39,700
	Farnborough	141.92	51,800
	Felixstowe	123.29	45,000
	Gibraltar	122.24	44,616
	Harrogate	119.18	43,500
	High Wycombe	170.14	62,100
	Kemble	108.77	39,700
	Lakenheath	150.96	55,100
	Liverpool	106.30	38,800
	London	213.15	77,800
	Loudwater	143.84	52,500
United Kingdom (Continued)	Menwith Hill	119.18	43,500
	Mildenhall	150.96	55,100
	Oxfordshire	105.75	38,600
	Plymouth	105.75	38,600
	Portsmouth	105.75	38,600
	Reading	170.14	62,100
	Rochester	109.32	39,900
	Southampton	121.10	44,200
	Surrey	132.61	48,402
	Waterbeach	120.27	43,900
	West Byfleet	72.33	26,400
	Wiltshire	113.97	41,600
	All cities other than Basingstoke, Bath, Belfast, Birmingham, Bracknell, Bristol, Brough, Bude, Cambridge, Caversham, Chelmsford, Cheltenham, Chicksands, Croughton, Dunstable, Edinburgh, Edzell, Fairford, Farnborough, Felixstowe, Ft. Halstead, Gibraltar, Glenrothes, Greenham Common, Harrogate, High Wycombe, Hythe, Kemble, Lakenheath, Liverpool, London, Loudwater, Menwith Hill, Mildenhall, Nottingham, Oxfordshire, Plymouth, Portsmouth, Reading, Rochester, Southampton, Surrey, Waterbeach, Welford, West Byfleet, and Wiltshire	104.93	38,300
Venezuela	Caracas	156.16	57,000
Vietnam	Hanoi	128.22	46,800

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