{"id":198,"date":"2023-04-10T15:11:58","date_gmt":"2023-04-10T19:11:58","guid":{"rendered":"https:\/\/hrbcomlnp.hrblock.com\/expat-tax-preparation\/resource-center\/?p=198"},"modified":"2025-03-13T15:00:34","modified_gmt":"2025-03-13T19:00:34","slug":"form-2555-how-to-exclude-foreign-income-on-your-taxes","status":"publish","type":"post","link":"https:\/\/hrbcomlnp.hrblock.com\/expat-tax-preparation\/resource-center\/forms\/form-2555-how-to-exclude-foreign-income-on-your-taxes\/","title":{"rendered":"Form 2555: Excluding Foreign Income"},"content":{"rendered":"\n

Form 2555 is one of the tax forms you\u2019ll want to get familiar with if you\u2019re an American working and living overseas. It’s the form you file to claim the Foreign Earned Income Exclusion<\/a>, which (if you qualify for it) can save you a lot of headaches and a lot of money come tax season. Below, we\u2019ll dive into the basics of Form 2555, including why it exists, who files it, and a quick run-through of how to do it.<\/p>\n\n\n\n

Between all the different acronyms and form numbers, taxes as an expat can be confusing\u2014that\u2019s why we\u2019re here to guide you through the process! Taxes are tricky and filing the wrong form can lead to all sorts of trouble. Start with H&R Block today<\/a> and we\u2019ll make sure your taxes are done right.<\/strong> No matter where in the world you are, we\u2019ve got a tax solution for you \u2014 whether you want to DIY your expat taxes<\/a> or file with help from an advisor.<\/a><\/p>\n\n\n\n

File on my own<\/a><\/div>
File with an advisor<\/a><\/div><\/div>\n\n\n\n

What is Form 2555 used for?<\/h2>\n\n\n\n

Form 2555 is the form you file to claim the Foreign Earned Income Exclusion, which allows you to exclude up to $126,500 of foreign earned income for the 2024\/2025 tax year.\u00a0<\/p>\n\n\n\n

The Foreign Earned Income Exclusion exists the help prevent double-taxation. Most countries implement some sort of tax on income earned within their borders. The U.S. is the same way. What\u2019s different about the U.S., though, is that the U.S. taxes income based on citizenship and residency \u2014 meaning you still have to pay taxes on foreign income<\/a> you earned abroad.<\/p>\n\n\n\n

To help protect Americans earning income abroad from being double-taxed (once by the U.S. and once by the country in which they earned the income), the U.S. government created foreign tax credits<\/a>, deductions, and exclusions qualifying expats can claim. Tax form 2555 is the form you use to figure out and claim the foreign earned income exclusion and housing exclusion or deduction.<\/p>\n\n\n\n

If you\u2019re unsure if you should file Form 2555 to claim the foreign income exclusion or Form 1116 to claim the Foreign Tax Credit,<\/a> let us help. No matter where in the world you are, we\u2019ve got a tax solution for you \u2014 whether you want to DIY your expat taxes<\/a> or file with help from an advisor.<\/a><\/p>\n\n\n\n

Form 2555 vs. Form 1116<\/h3>\n\n\n\n

Many expats have a choice between using Form 2555 to claim the Foreign Earned Income Exclusion and using form 1116<\/a> to claim the Foreign Tax Credit<\/a>. Big factors U.S. expats should consider when choosing between the FEIE or the FTC include:<\/strong><\/p>\n\n\n\n