Introduction
Searching for Form 2555-EZ? Here's the catch: the IRS stopped offering it after tax year 2018. Since 2019, every taxpayer claiming the Foreign Earned Income Exclusion (FEIE) must use the full Form 2555.
This guide is for U.S. citizens and resident aliens living and working abroad, including Australians holding U.S. citizenship or a green card. It is not for foreign nationals whose tax home is in the United States. Those taxpayers generally file Form 1040-NR on U.S.-sourced income.
This guide covers eligibility, the current form, qualifying income, housing benefits, Form 1116, recordkeeping, deadlines, and common errors.
Key Takeaways
- Form 2555-EZ ended after tax year 2018; use the full Form 2555.
- You need a foreign tax home, foreign earned income and a qualifying test.
- Exclusion limits change yearly, so match the figure to your return year.
- FEIE does not replace FBAR or Form 8938 reporting.
Form 2555-EZ Is No Longer the Current Form
What Form 2555-EZ was designed to do
The EZ form was a shortcut. Under the 2018 EZ form rules, you could use it only if you:
- Earned foreign wages or salary, with income of at most $103,900
- Filed a calendar-year return covering 12 months
- Had no self-employment income, business expenses, or moving expenses
- Claimed no housing exclusion or deduction
Why you should use the current Form 2555
Beginning with tax year 2019, the IRS requires all taxpayers to use Form 2555 to claim the exclusion. Old EZ PDFs and checklists are out of date.
Form versions, line numbers, exclusion amounts and housing limits change by tax year. Always pull the IRS form and instructions for the year you're filing.
Who Qualifies to Claim the Foreign Earned Income Exclusion?
Taxpayer and tax-home requirements
You must be a U.S. citizen or resident alien who has a foreign tax home and foreign earned income, and who meets either the bona fide residence or physical presence test. Nonresident aliens don't qualify. A foreign employer, foreign bank account or foreign citizenship alone isn't enough.
Your tax home is your principal place of business or employment, not necessarily where your family lives. The IRS gives an example: an offshore worker on a 28 days on, 28 days off rotation returned to a U.S. family home during off periods. The IRS found a U.S. abode, so the foreign tax home test failed despite foreign employment.
Bona fide residence versus physical presence
| Bona fide residence | Physical presence | |
|---|---|---|
| Core rule | Uninterrupted residence in a foreign country that includes an entire tax year | 330 full days in any 12 consecutive months |
| Evidence | Intent to stay indefinitely, housing, family, visa, employment agreement | Travel logs, tickets, passport stamps |
| Notes | A year abroad alone isn't enough | Days needn't be consecutive; a full day runs midnight to midnight |
Resident aliens using bona fide residence must also be citizens or nationals of a country with a U.S. income tax treaty.
What counts as foreign earned income
Qualifying income includes wages, salary, professional fees and income from personal services, including self-employment. Taxable noncash allowances and reimbursements can also qualify.
Income sourced to U.S. work does not qualify, whatever the employer's location or payment method. For mixed-location pay, use foreign workdays over total workdays. The IRS example: 210/240 × $88,800 = $77,700 of foreign earned income.
What does not qualify
- Interest, dividends and capital gains
- Pensions and annuities
- Social Security
- Pay as a U.S. government employee
These may need separate tax treatment.
Special situations that need review
- Partial-year moves: prorate the limit by qualifying days over tax-year days.
- Multiple countries: presence can span countries, but international waters and airspace don't count as foreign.
- Self-employment: the FEIE does not reduce self-employment tax. Totalization agreements may address dual social security coverage.
- Allowances and temporary U.S. work: both need careful sourcing.
If your facts are messy, get professional review before filing.
How to Complete the Current Form 2555
Gather records before starting
- SSN or ITIN
- Foreign address and tax-home details
- Travel calendar with entry and exit records
- Employment or self-employment records and foreign pay statements
- Leases, utility bills and housing receipts
- Exchange-rate documentation
Understand the form's structure
The 2024 and 2025 forms follow this sequence:
| Part | Label | Lines |
|---|---|---|
| I | General Information | 1-9 |
| II | Bona Fide Residence Test | 10-15 |
| III | Physical Presence Test | 16-18 |
| IV-V | All Taxpayers | 19-27 |
| VI | Housing Exclusion and/or Deduction | 28-36 |
| VII | Foreign Earned Income Exclusion | 37-42 |
| VIII | Housing Exclusion, FEIE, or Both | 43-45 |
| IX | Housing Deduction | 46-50 |
Part I covers your identification, foreign address, employer and tax home. Complete only the residence or presence part that matches your test, with dates, countries visited and interruptions backed by records.
Report income and convert currency
Separate wages, self-employment earnings and allowances from nonqualifying income. Report in U.S. dollars, generally at the spot rate when income is received, paid or accrued. A yearly average is permitted for income received evenly through the year. Apply the method consistently.
Calculate the exclusion and connect it to your return
Maximum exclusion by year:
| Tax year | Maximum FEIE |
|---|---|
| 2024 | $126,500 |
| 2025 | $130,000 |
| 2026 | $132,900 |
On the 2024 and 2025 forms, line 45 flows to Schedule 1, line 8d. The Foreign Earned Income Tax Worksheet then computes your tax using the rates that would apply without the exclusion.
Review before filing
- Confirm income totals match the rest of your return
- Verify travel dates are consistent across entries
- Recheck currency conversions against your chosen rate method
- Support housing costs with leases, bills and receipts
- Attach required statements and schedules
Foreign Housing Benefits and Form 2555 Versus Form 1116
Foreign housing exclusion or deduction
Employees may claim an exclusion for employer-provided amounts included in foreign earned income, including salary, reimbursements and third-party payments. Self-employed taxpayers claim a deduction.
The benefit equals capped qualifying expenses minus a base amount (16% of the maximum exclusion). For 2025, the base is $20,800 and the general expense cap is $39,000.
Qualifying costs include rent, utilities (except telephone), property insurance, nonrefundable lease fees, furniture rental, residential parking and repairs. Excluded: purchases and improvements, purchased furniture, meals, domestic labor, and mortgage principal or deductible interest.
Locality caps can replace the general cap. For 2026, Notice 2026-25 sets full-year ceilings of $65,600 for Sydney and $40,600 for Melbourne. Those are caps, not automatic benefits.
Form 2555 compared with Form 1116
The exclusion removes eligible income from taxable income. Form 1116 generally gives a credit against U.S. tax for foreign income tax paid. You can't claim a credit or deduction for foreign tax on excluded income.
Consider:
- Income type and the foreign tax rate you pay
- Housing costs
- Credit carryovers
- Future consequences
The exclusion bars the Earned Income Tax Credit and the Additional Child Tax Credit. Excluded income also isn't compensation for IRA contributions. Neither method wins for every expat.
Revoking the election means attaching a statement to the first affected return, and re-electing within the next five tax years needs IRS approval.
Other foreign reporting obligations
Form 2555 replaces nothing else:
- FBAR: required when foreign accounts exceed an aggregate $10,000 at any time. File with FinCEN by April 15, automatically extended to October 15.
- Form 8938: for taxpayers abroad, thresholds start above $200,000 at year-end or $300,000 anytime (single), and $400,000/$600,000 for joint filers. It accompanies your return.
Filing, Deadlines, Records, and Common Mistakes
Filing the form with your federal return
Attach Form 2555 to Form 1040 or 1040-SR, or to an amended return. It can't be filed alone. Returns with foreign addresses can be e-filed; paper filers use the IRS international mailing instructions.
Deadlines and extensions
For a 2025 calendar-year return, per Publication 54:
| Extension | Date | Notes |
|---|---|---|
| Automatic (abroad) | June 15, 2026 | Attach a statement; interest runs from April 15 |
| Form 4868 | October 15, 2026 | Extends filing, not payment |
| Discretionary | December 15, 2026 | Request by letter by October 15 |
| Form 2350 | Approved date | More time to meet residence or presence tests |
Late elections have limited relief, so late filing doesn't always forfeit the exclusion. Get advice before assuming either way.
Mistakes to avoid
- Using the obsolete Form 2555-EZ
- Claiming nonforeign or passive income
- Miscounting full days or overlooking U.S. workdays
- Mishandling currency conversion
- Filing without support for day counts or housing amounts
Keep a year-round file of travel dates, pay records and housing receipts. If you're switching between the FEIE and foreign tax credit, or have several foreign income sources, bring in cross-border tax help.
Conclusion: Use the Correct Form for the Correct Tax Year
Form 2555-EZ is gone. Eligibility rests on:
- A foreign tax home
- Qualifying earned income
- A passed residence or presence test
The IRS instructions for your tax year govern the numbers.
For complex situations, VJM Global provides U.S. tax compliance services, including individual Form 1040 and 1040-NR preparation, and can review your circumstances. Foreign nationals earning U.S.-sourced income can also get help with treaty benefits and withholding.
Frequently Asked Questions
How do I know if I qualify for a foreign earned income exclusion?
You need a foreign tax home, foreign earned income from personal services, and you must pass either the bona fide residence or physical presence test.
What does Form 2555 do?
It claims the Foreign Earned Income Exclusion and, where applicable, the foreign housing exclusion or deduction on your U.S. return.
What are the latest instructions for Form 2555 in 2024?
Use the 2024 instructions on the IRS site. The 2024 maximum is $126,500. Later years use different limits and lines.
Is Form 2555-EZ still available?
No. It was discontinued after 2018. Eligible taxpayers now file the full Form 2555 for the relevant tax year.
Can I claim the foreign earned income exclusion if I live in the United States?
Generally no. A U.S. abode typically prevents a foreign tax home, and temporary visits alone don't change that. The answer turns on your actual residence, work location and qualifying period.
