Irs Publication 54 - Tax Guide For U.s. Citizens And Resident Aliens Abroad

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housing amount, subject to the limit described

Neither spouse’s residence is within rea-

2555-EZ. Form 2555 shows how you meet the

later.

sonable commuting distance of the other

bona fide residence test or physical presence

spouse’s tax home.

test, how much of your earned income is ex-

Take the deduction by including it in the total

cluded, and how to figure the amount of your

on line 36 of Form 1040. On the dotted line next

allowable housing exclusion or deduction.

to line 36, enter the amount and write “Form

Housing exclusion. Each spouse claiming a

2555.”

Do not submit Form 2555 or Form 2555-EZ

housing exclusion must figure separately the

by itself.

part of the housing amount that is attributable to

Self-employed and employer-provided

employer-provided amounts, based on his or

Form 2555-EZ

amounts. If you are both an employee and a

her separate foreign earned income.

self-employed individual during the year, you

can deduct part of your housing amount and

Form 2555-EZ has fewer lines than Form 2555.

One Household

exclude part of it. To find the part that you can

You can use this form if all seven of the following

exclude, multiply your housing amount by the

apply.

If you and your spouse lived in the same foreign

employer-provided amounts (discussed earlier)

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You are a U.S. citizen or a resident alien.

household and file a joint return, you must figure

and then divide the result by your foreign earned

your housing amounts jointly. If you file separate

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income. This is the amount you can use to figure

Your total foreign earned income for the

returns, only one spouse can claim the housing

year is $87,600 or less.

your foreign housing exclusion. You can deduct

exclusion or deduction.

the balance of the housing amount, subject to

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You have earned wages/salaries in a for-

In figuring your housing amount jointly, you

the limit described later.

eign country.

can combine your housing expenses and figure

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Example. Your housing amount for the year

You are filing a calendar year return that

one base housing amount. Either spouse (but

is $12,000. During the year, your total foreign

covers a 12-month period.

not both) can claim the housing exclusion or

earned income is $80,000, of which half

housing deduction. However, if you and your

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You did not have any self-employment in-

($40,000) is from self-employment and half is

spouse have different periods of residence or

come for the year.

from your services as an employee. Half of your

presence and the one with the shorter period of

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housing amount ($12,000 ÷ 2) is considered

You did not have any business or moving

residence or presence claims the exclusion or

expenses for the year.

provided by your employer. You can exclude

deduction, you can claim as housing expenses

only the expenses for that shorter period.

$6,000 as a housing exclusion. You can deduct

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You are not claiming the foreign housing

the remaining $6,000 as a housing deduction

exclusion or deduction.

Example. Tom and Jane live together and

subject to the following limit.

file a joint return. Tom was a bona fide resident

Form 2555

of and had his tax home in Ghana from August

Limit

17, 2008, through December 31, 2009. Jane

was a bona fide resident of and had her tax

If you claim exclusion under the bona fide resi-

Your housing deduction cannot be more than

home in Ghana from September 15, 2008,

dence test, you should fill out Parts I, II, IV, and V

your foreign earned income minus the total of:

through December 31, 2009.

of Form 2555. In filling out Part II, be sure to give

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your visa type and the period of your bona fide

During 2008, Tom received $75,000 of for-

Your foreign earned income exclusion,

residence. Frequently, these items are over-

eign earned income and Jane received $50,000

plus

looked.

of foreign earned income. Tom paid $10,000 for

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Your housing exclusion.

housing expenses, of which $7,500 was for ex-

If you claim exclusion under the physical

penses incurred from September 15 through the

presence test, you should fill out Parts I, III, IV,

end of the year. Jane paid $3,000 for housing

Carryover. You can carry over to the next

and V of Form 2555. When filling out Part III, be

expenses in 2008, all of which were incurred

year any part of your housing deduction that is

sure to insert the beginning and ending dates of

during her period of residence in Ghana.

not allowed because of the limit. You are al-

your 12-month period and the dates of your

lowed to carry over your excess housing deduc-

Tom and Jane figure their housing amount

arrivals and departures, as requested in the

tion to the next year only. If you cannot deduct it

jointly. If Tom claims the housing exclusion, their

travel schedule.

in the next year, you cannot carry it over to any

housing expenses would be $13,000 and their

You must fill out Part VI if you are claiming a

other year. You deduct the carryover in figuring

base housing amount, using Tom’s period of

foreign housing exclusion or deduction.

adjusted gross income. The amount of carryover

residence (Aug. 17 – Dec. 31, 2008), would be

Fill out Part IX if you are claiming the foreign

$5,247 ($38.30 × 137 days). Tom’s housing

you can deduct is limited to your foreign earned

housing deduction.

income for the year of the carryover minus the

amount would be $7,753 ($13,000 – $5,247). If,

If you are claiming the foreign earned income

total of your foreign earned income exclusion,

instead, Jane claims the housing exclusion, their

exclusion, fill out Part VII.

housing exclusion, and housing deduction for

housing expenses would be limited to $10,500

that year.

($7,500 + $3,000) and their base housing

Finally, if you are claiming the foreign earned

amount, using Jane’s period of residence (Sept.

income exclusion, the foreign housing exclu-

Married Couples

15 – Dec. 31, 2008), would be $4,136 ($38.30 ×

sion, or both, fill out Part VIII.

108 days). Jane’s housing amount would be

If you and your spouse both qualify to claim

$6,364 ($10,500 – $4,136).

If both you and your spouse qualify for the for-

the foreign earned income exclusion, the foreign

eign housing exclusion or the foreign housing

housing exclusion, or the foreign housing de-

deduction, how you figure the benefits depends

duction, you and your spouse must file separate

on whether you maintain separate households.

Forms 2555 to claim these benefits. See the

Form 2555 and

discussion earlier under Separate Households.

Form 2555-EZ

Separate Households

Illustrated Example

If you and your spouse live apart and maintain

If you are claiming the foreign earned income

Jim and Judy Adams are married and have two

separate households, you both may be able to

exclusion only, you can use Form 2555. In some

dependent children. They are both U.S. citizens

claim the foreign housing exclusion or the for-

circumstances, you can use Form 2555-EZ to

and they file a joint U.S. income tax return. Each

eign housing deduction. You can both claim the

claim the foreign earned income exclusion. You

one has a tax home in a foreign country and

exclusion or the deduction if both of the following

must file one of these forms each year you are

each meets the physical presence test for all of

conditions are met.

claiming the exclusion.

2008. They both can exclude their foreign

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You and your spouse have different tax

If you are claiming either the foreign housing

earned income up to the limit. Their qualified

homes that are not within reasonable com-

exclusion or the foreign housing deduction, you

housing expenses are limited to 30% of the

muting distance of each other.

must use Form 2555. You cannot use Form

maximum foreign earned income exclusion.

Chapter 4 Foreign Earned Income and Housing: Exclusion – Deduction

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Irs Publication 54 - Tax Guide For U.s. Citizens And Resident Aliens Abroad - 2008 Page 22

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