We use cookies to improve security, personalize the user experience,
enhance our marketing activities (including cooperating with our marketing partners) and for other
business use.
Click "here" to read our Cookie Policy.
By clicking "Accept" you agree to the use of cookies. Read less
What is 2555? A Comprehensive Guide to Foreign Income Exemption
Definition & Meaning
The IRS Form 2555 is a tax form used by U.S. taxpayers who earn income from foreign sources. This form allows individuals to claim the foreign earned income exclusion, which can exempt a portion of their foreign income from U.S. taxation. To qualify for this exemption, taxpayers must meet specific criteria, including residing and working outside the United States and passing either the Bona Fide Residence Test or the Physical Presence Test.
Table of content
Legal Use & context
Form 2555 is primarily used in tax law, particularly for individuals who have foreign income. It is relevant for expatriates and those working abroad. Taxpayers can manage their own filings using this form, especially with the help of legal templates provided by services like US Legal Forms, which are drafted by legal professionals.
Key legal elements
Real-world examples
Here are a couple of examples of abatement:
Example 1: A U.S. citizen working in London for a multinational company can use Form 2555 to exclude up to $91,500 of their foreign earnings from U.S. taxes.
Example 2: A person who has lived in Germany for two years and meets the Physical Presence Test can file Form 2555 to claim both the foreign earned income exclusion and housing deductions. (hypothetical example)
Comparison with related terms
Term
Definition
Form 2555
Used to claim foreign earned income exclusion and housing deductions.
Form 1116
Used to claim the foreign tax credit for taxes paid to foreign governments.
Bona Fide Residence Test
A test to determine if a taxpayer has established a permanent residence in a foreign country.
Physical Presence Test
A test based on the number of days a taxpayer is physically present in a foreign country.
Common misunderstandings
What to do if this term applies to you
If you are a taxpayer earning income abroad, consider filing Form 2555 to claim your foreign earned income exclusion. You can find ready-to-use legal form templates through US Legal Forms, which can simplify the process. If your situation is complex, it may be wise to consult with a tax professional for personalized advice.
Find the legal form that fits your case
Browse our library of 85,000+ state-specific legal templates.