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Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 7872
Experience:  15years with H & R Block. Divisional leader, Instructor
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I have been living in Asia since July 2008. I have not started

Customer Question

I have been living in Asia since July 2008. I have not started to work until November 2009, I have a couple questions about filling out the f2555ez form for foreign earned income exclusion.
Submitted: 3 years ago.
Category: Tax
Expert:  Robin D. replied 3 years ago.

Robin D :

Hello and thank you for using Just Answer

Customer :

Hi, I was wondering how to file in line 1B on the f2555ez form. If I am filing for 2009, would I use the date I entered the foreign country in 208 or just Jan 1, 2009?

Robin D :

The time out of the US can be counted for any days even if you were not working. Your time overseas will be counted from the first day you were there until you are back in the US. So use the date in 2008 as beginning.

Customer :

once I establish my bona fide residence for 2009, do I put the same info for the next year (2010)? What about the "the date the bona fide residence ended" in line 1B? Do I put nothing since I am still living abroad?

Robin D :

You can use the Physical presence test since you were out of the US for 330 days in the tax year (2009). For the ending date use "Continuing"

Robin D :

Bona Fide or Physical use the Continuing to show you are still overseas

Customer :

what about 2010? I was out of the country for less than 330 days. I would like to use bona fide for both 2009 & 2010 for this reason.

Robin D :

Well then with Bonafide you would need to start so mark the Bonafide section for 2009.

Robin D :

@

Customer :

ok, and use it every year until I move back to the US?

Robin D :

For 2010 your actions will show more than just your words that you were a bonfide resident. Your reasons for being back in the US will be important.

Customer :

This would only come up if they chose to audit?

Robin D :

That is correct on both.

Customer :

what happens if I move back next year (2012) in the spring? How do I file to get foreign exclusion for the money earned before moving back?

Robin D :

You will cease to be a bonafide resident when you leave the country to return to US and not go back to Asia. You will not be able to exclude in 2012 if you are not out of the US for 330 days in 2012 or still a bonafide resident of the foreign country. This would mean no exclusion for 2012.

Customer :

so choosing when to return is important to being able not to be taxed on the foreign income in 2012?

Robin D :

Yes. If you are taxed by the foreign country you could use the Foreign Tax Credit to lessen the US burden.

Robin D :

for 2012

Customer :

oh ok, where do I get info on the foreign tax credit?

Robin D :

That is under Form 1116 on IRS.gov

Customer :

and I would only use that form to get credit on the income earned if I don't file the f2555 form?

Robin D :

If you use the 2555 you cannot claim a credit on the 1116 for the same income. You can use both just not for the same dollar. If you had more income than could be excluded then the 1116 could be used for the remaining income that was taxed by foreign country.

Customer :

what do you mean by remaining income? How is there income outside of the salary?

Robin D :

The exclusion is only up to a certain amount ($92900 for 2011) if you make more than that then you would pay US tax on the excess of the exclusion. So if you paid foreign tax on the wages too then you would use 1116 for the amount over the $92900. It takes more calculations but could be worth it for high earners.

Customer :

ok

Customer :

i was told you can use the f2555 form to get exclusion on income earned while living in the foreign country, is it true that you can still get the exclusion even if you didn't pay any taxes on the income in the foreign country?

Robin D :

Yes, and the amount for each year is indexed for inflation.

Maximum Foreign Earned Income Exclusion Amounts by Year

  • Tax year 2011: $92,900
  • Tax year 2010: $91,500
  • Tax year 2009: $91,400
  • Tax year 2008: $87,600
  • Tax year 2007: $85,700
  • Tax year 2006: $82,400
  • Tax years 2002-2005: $80,000
  • Tax year 2001: $78,000
  • Tax year 2000: $76,000
  • Tax year 1999: $74,000
  • Tax year 1998: $72,000
Customer :

ok

Robin D :

The above amounts are the most for that year that can be excluded.

Robin D :

You should have no problem with the EZ

Robin D :

You can always come back even after you click ACCEPT

Customer :

Hi Robin, I have some follow up questions for you. When is a good time to chat?

Robin D :

Any time you would like to post your question here is fine. Your question is still open.

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Robin D.
Robin D.
7314 Satisfied Customers
15years with H & R Block. Divisional leader, Instructor