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Screen 2555-2 - Foreign Earned Income Exclusion, Page 2 (1040)
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Foreign Earned Income
Use this section to enter noncash income, allowances, reimbursements, or expenses paid on the taxpayer’s behalf. When you enter amounts here for wages, business, and partnership income, they override the calculated amounts.
Employer’s name / T,S / State
The employer’s name, T,S code, and state postal code transfer automatically from the corresponding fields in the 2555 screen for this activity.
Wages and salaries (Force)
This amount overrides the calculated amount and reports on the Form 2555 Foreign Earned Income Allocation Worksheet according to the assigned allocation code. This amount doesn't report on Form 1040, line 1. If it should report on Form 1040, line 1, you'll need to also enter it in the 1099M, FEC, and/or W2 screens.
Allowable share...partnership (Force)
If this field has an amount, then the partnership’s name, address, and type of income you entered in the K1 screen doesn't print on the return.
Other foreign earned income
If you enter multiple sources of other foreign earned income, a required statement prints. For electronic filing purposes, when multiple sources of other foreign earned income are present, the word
Various
transmits in the electronic file instead of the separate source descriptions.Excludable meals and lodging under section 119
Enter the amount of meals and/or lodging provided by, or on behalf of, the employer that's excludable from income under section 119. This amount reports on line 25 of the form. For additional information, see the Form 2555 instructions for line 25.
Deductions Allocable to Foreign Earned Income
All foreign source deductions allowed in figuring adjusted gross income report in full on Form 1040 and the related forms and schedules. The amounts allocable to the excluded income calculate and report on Form 2555, Page 3, Part VIII.
The following types of deductions may be used in this calculation.
- Moving expenses
- Employer-equivalent self-employment tax
- Keogh/SEP/SIMPLE
- Form 2106 expenses reported on Form 1040, Page 1 (such as QPA, reservists, and fee-basis officials)
- Business expenses claimed on Schedule C
- Business expenses claimed on Schedule F
- Partner's share of foreign earned income and operating expenses
Use the activity's allocation code to allocate any related self-employment items. A reduction ratio is applied to the deductions allocated to foreign earned income during the assignment to determine the amount that is definitely related to the excluded income. The ratio calculates as foreign earned income and housing exclusions over total foreign earned income.
The Form 2555, Page 3, Part VIII calculation is reported on the Form 2555 Deductions Allocable to Excluded Income Worksheet and "See Wrksheet" prints to the left of Form 2555, Line 44. You can submit this as the required Form 2555, Page 3, Part VIII calculation.
Other allocable deductions
Amounts you enter here transfer to Form 2555 Foreign Earned Income Allocation Worksheet. They report as other expenses on the Form 2555 Deductions Allocable to Excluded Income Worksheet.
Total expenses allocable to Form 2555 (Force)
The amount you enter here overrides the calculated amount and reports on Form 2555, Page 3, Part VIII. This amount doesn't report on either of the worksheets.
Exclusion of income earned in
2024
Enter the amount received in
2025
for services performed in 2024
that would've been excludable if received in 2024
. The prior year return may need to be amended.Only enter amounts that represent foreign earned income received in the current year for services performed in the previous year to the extent that the income would have been excludable if received in the previous year. This amount is added to the Form 2555, line 45.
Complete the
Details on how the exclusion was figured
field to indicate how the exclusion was calculated.Moving expenses connected with foreign earned income (Force)
Any amount you enter here overrides the calculated amount and reports on the Form 2555 Deductions Allocable to Excluded Income Worksheet as a deduction to be allocated to excluded income.
To calculate the amount of the moving expense that is allocable to excluded foreign earned income, the application multiplies the moving expense deduction by a fraction. The numerator is the total excluded foreign earned income and housing amounts for both years and the denominator is the total foreign earned income for both years.
The tax application uses the preceding or following year amounts entered in the
Foreign income exclusion
and Foreign earned income
fields to calculate the numerator and denominator.Allocate moving expenses over 2 years (Force)
Moving expenses are allocated over 2 years if the qualifying days under either the bona fide residence test or the physical presence test aren't at least 120 days during the current tax year. Mark this field if you want to force the allocation of moving expenses over 2 years.
2024
and 2026
Foreign income exclusionMoving expenses are allocated over 2 years if the qualifying days under either the bona fide residence test or the physical presence test aren't at least 120 days during the current tax year. For a move to the U.S., use the
2024
fields (unless they proforma’d from the prior year). For a move from the U.S., use the 2026
fields.2024
and 2026
Foreign earned incomeMoving expenses are allocated over 2 years if the qualifying days under either the bona fide residence test or the physical presence test aren't at least 120 days during the current tax year. For a move to the U.S., use the
2024
fields (unless they proforma’d from the prior year). For a move from the U.S., use the 2024
fields.Housing Exclusion/Deduction
Use this section to enter qualified housing expense information if the client claims the housing exclusion and/or deduction reported on Form 2555, Page 3, Part VI and/or Part IX.
High cost housing expense location(s)
Use this statement to enter the city and country for high cost of living housing expenses incurred during the tax year. (Refer to the Form 2555 IRS instructions for a locality table.) The city and country print on Form 2555, Page 3, Part VI, line 29a. If the housing expense location isn't listed in the IRS table, leave this statement blank.
Limit on housing expenses (Force)
Enter housing expense adjusted limitation for qualified individuals incurring housing expenses in 1 or more high-cost localities. (Refer to the Form 2555 IRS instructions for a locality table.) If this field is left blank, the standard maximum housing expense limitation is used on Form 2555, Page 3, Part VI.
Employer provided amounts (Force)
The amount you enter here overrides the calculated amount and reports on Form 2555, Page 3, Part VI. The amount calculated is the total foreign earned income less any allowable share for personal services.
Number of days in qualifying period (Force)
This number overrides the calculated number and reports on Form 2555, Page 3, Part VI and/or VII. The number of days in the qualifying period that fall within the current tax year calculates based on the dates of residency on Form 2555, line 10 or 16.
Housing deduction carryover (Force)
Use this field to override (force) the calculated housing deduction carryover reported on Form 2555, Page 3, Part IX. A carryover amount is calculated on the Housing Deduction Carryover section of the Form 2555 Foreign Earned Income Allocation Worksheet.
2024
Form 2555, line 46This amount proformas from the prior year and is used in the housing deduction carryover calculation on the Form 2555 Foreign Earned Income Allocation Worksheet.
2024
Form 2555, line 48This amount proformas from the prior year and is used in the housing deduction carryover calculation on the Form 2555 Foreign Earned Income Allocation Worksheet.