The Differences Between Form 2555 and Form 2555-EZ

February 16, 2018

With so many available forms on the IRS’ website it can be confusing to find out the right one to use and what the differences between some forms even are. Two forms that many expats use when filing are Form 2555 and Form 2555-EZ. But why would an expat want to use one of these forms? Well, one of the tax breaks for expatriates is the Foreign Earned Income Exclusion. This means that when an American moves abroad, he or she can exclude foreign earned income up to $102,100 as of 2017 from U.S. taxation. So for example, an expatriate making $80,000 overseas might not need to pay any additional U.S.taxes (although he or she are definitely still required to file IRS Form 1040 and claim the exclusion). But if the expatriate makes $105,000, a tax must be paid on the difference between his or her salary and $102,100, or, in this instance, $2,900. It’s easy to see why an expat would like to claim foreign earned income exclusion; as we doubt that many of you out there enjoy being taxed twice on your hard earned income.

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U.S. Source Income vs. Foreign Income

February 16, 2018
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A lot is said about the Foreign Earned Income Exclusion (FEIE) and the Foreign Tax Credit (FTC) in the U.S. expat community, but little is said about how income is classified. The IRS tax rules state that for both the FEIE and the FTC stipulate that the income being excluded or used for credit must be foreign earned income. But sometimes determining where your income is sourced can be the tricky part.

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