Home | Forms Library | How to File | Decision Flow | Contact

Step 5: Form 2555

Form 2555 is used to claim the Foreign Earned Income Exclusion, often called FEIE. If you qualify, it may reduce regular U.S. income tax on qualifying foreign earned income.

Step 5 of 8

Schedule C | Schedule SE | Form 2555 | Schedule 1 | Form 1040

Do You Qualify for FEIE?

The Foreign Earned Income Exclusion is not automatic. You generally need foreign earned income, a tax home outside the United States, and one of the following tests:

• Physical Presence Test: You were physically present in foreign countries for at least 330 full days during a qualifying 12-month period.
• Bona Fide Residence Test: You were a bona fide resident of a foreign country for an uninterrupted period that includes an entire tax year.

Check FEIE eligibility in detail →

What FEIE Does

The Foreign Earned Income Exclusion may allow you to exclude a limited amount of qualifying foreign earned income from regular U.S. income tax.

• Applies to qualifying earned income from work performed abroad
• Does not generally apply to passive income such as dividends, interest, capital gains, pensions, or rental income
• Does not usually eliminate U.S. self-employment tax
• Works differently than the Foreign Tax Credit

FEIE vs Foreign Tax Credit

FEIE excludes qualifying foreign earned income from regular U.S. income tax. The Foreign Tax Credit gives credit for qualifying income taxes paid or accrued to another country.

Choosing the right option depends on your income, country of residence, foreign taxes paid, self-employment status, and future filing strategy.

Compare FEIE vs FTC →

Where This Fits in Your Tax Flow

Form 2555 usually comes after you have organized your income and confirmed whether you qualify for FEIE.

• After calculating foreign earned income
• After Schedule C if you are self-employed
• Before the final Form 1040 calculation
• Before deciding whether FEIE, FTC, or both may apply

View the current-year filing sequence →

Download Form 2555

Download Form 2555 from the IRS

How to Complete Form 2555

Use the IRS form alongside this guide. The exact lines may change by tax year, but the major sections usually focus on eligibility, foreign earned income, housing, and the exclusion calculation.

General Information

• Enter your foreign address
• Provide employer or self-employment information
• Confirm your tax home is outside the United States
• Identify which eligibility test you meet

Physical Presence or Bona Fide Residence

• List travel dates if using the Physical Presence Test
• Count qualifying days outside the United States
• Confirm whether your residence facts support the Bona Fide Residence Test

Tax Home

Your tax home generally means your main place of work or business. For FEIE, your tax home generally needs to be in a foreign country.

• Identify where you primarily live and work
• Confirm your work is based outside the United States
• Keep records that support your foreign work and residence situation

Your tax home is not the same as your citizenship. It usually relates to where your regular work or business activity is based.

Foreign Earned Income

Enter your qualifying foreign earned income. This may include salary, wages, freelance income, consulting income, or other compensation for work performed abroad.

If you are self-employed, confirm your business income first. Schedule C and Schedule SE may still matter even if Form 2555 reduces regular income tax.

Foreign Housing, If Applicable

Some taxpayers may also need to review the foreign housing exclusion or deduction. This can apply when qualifying housing costs are connected to foreign earned income.

Review the Foreign Housing Exclusion →

Calculate Your Exclusion

• Apply the annual FEIE limit for the correct tax year
• Adjust for partial-year eligibility if needed
• Confirm that excluded income is qualifying foreign earned income
• Transfer the results into the rest of the return as required

Important Notes

• FEIE does not usually reduce self-employment tax
• You must qualify before applying the exclusion
• The exclusion limit changes by tax year
• Not all foreign income is foreign earned income
• FEIE should be compared with the Foreign Tax Credit before choosing a filing strategy

What to Do Next

• Review FEIE Eligibility
• Compare FEIE vs FTC
• Review the full Form 2555 Guide
• Continue to Schedule 1
• Continue to Form 1040

← Back to Schedule SE Next: Schedule 1 →