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2020 Instructions for Form 2555

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2020 Instructions for Form 2555 Userid: CPM Schema: instrx Leadpct: 100% Pt. size: 9 Draft Ok to Print AH XSL/XML Fileid: … ions/I2555/2020/A/XML/Cycle06/source (Init. & Date) _______ Page 1 of 12 16:49 - 18-Oct-2020 The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing. Department of the Treasury 2020 Internal Revenue Service Instructions for Form 2555 Foreign Earned Income Section references are to the Internal Revenue Note. Specific rules apply to determine if have a regular or principal place of Code unless otherwise noted. you are a resident or nonresident alien of business because of the nature of your the United States. See Pub. 519. trade or business, your tax home is your Future Developments regular place of abode (the place where For the latest information about Foreign country. A foreign country is you regularly live). any territory under the sovereignty of a developments related to Form 2555 and You aren't considered to have a tax government other than that of the United its instructions, such as legislation home in a foreign country for any period States. enacted after they were published, go to during which your abode is in the United IRS.gov/Form2555. The term “foreign country” includes the States, unless you are serving in support country's territorial waters and airspace, of the U.S. Armed Forces in an area What's New but not international waters and the designated as a combat zone. See airspace above them. It also includes the Service in a combat zone, later. COVID-19 emergency relief. Due to the seabed and subsoil of those submarine Otherwise, if your abode is in the United global health emergency caused by areas adjacent to the country's territorial States, you will not meet the tax home test COVID-19, the IRS has provided relief waters over which it has exclusive rights and cannot claim the foreign earned related to the time requirement necessary under international law to explore and income exclusion. to meet either the bona fide residence test exploit the natural resources. or physical presence test for purposes of The location of your abode is based on claiming the foreign earned income The term “foreign country” doesn't where you maintain your family, economic, exclusion. For more information, see include U.S. possessions or territories. It and personal ties. Your abode is not COVID-19 Emergency Relief, later. doesn't include the Antarctic region. necessarily in the United States merely because you maintain a dwelling in the Exclusion amount. For 2020, the Who Qualifies United States, whether or not your spouse maximum exclusion amount has You qualify to exclude your foreign earned and dependents use the dwelling. Your increased to $107,600. income from gross income if both of the abode is not necessarily in the United Reminders following apply. States while you are temporarily in the • You meet the tax home test (discussed United States. However, these factors can Tax home for individuals serving in a later). contribute to your having an abode in the combat zone. Certain individuals serving • You meet either the bona fide residence United States. in a combat zone in support of the U.S. test or the physical presence test Example. You are employed on an Armed Forces may nonetheless establish (discussed later). However, see offshore oil rig in the territorial waters of a a tax home in the foreign country of the COVID-19 Emergency Relief, later. combat zone. For more information, see foreign country and work a 28-day on/ Tax home test under Who Qualifies, later. Note. Income from working abroad as an 28-day off schedule. You return to your employee of the U.S. Government does family residence in the United States General Instructions not qualify for either of the exclusions or during your off periods. You are the housing deduction. Don't file Form considered to have an abode in the United Don't include on Form 1040 or 2555. States and don't meet the tax home test. ! 1040-SR, line 25a or 25b (federal You can't claim either of the exclusions or CAUTION income tax withheld from Form(s) Tax home test. To meet this test, your the housing deduction. tax home must be in a foreign country, or W-2 or 1099, respectively), any taxes an Service in a combat zone. Citizens employer withheld from your pay that was countries (see Foreign country, earlier), throughout your period of bona fide or residents of the United States serving in paid to the foreign country's tax authority an area designated by the President of the instead of the U.S. Treasury. residence or physical presence, whichever applies. For this purpose, your United States by Executive order as a period of physical presence is the 330 full combat zone for purposes of section 112 Purpose of Form days during which you were present in a in support of the U.S. Armed Forces can qualify as having a tax home in a foreign If you qualify, you can use Form 2555 to foreign country, or countries, not the 12 country, even if they have an abode within figure your foreign earned income consecutive months during which those the United States. For a list of IRS exclusion and your housing exclusion or days occurred. recognized combat zones, go to IRS.gov/ deduction. You cannot exclude or deduct Newsroom/Combat-Zones. more than the amount of your foreign Note. If you did not live 330 full days in a earned income for the year. foreign country, or countries, during a Travel to Cuba 12-month period, you are not entitled to General Information claim the foreign earned income Generally, if you were in Cuba in violation exclusion. The 330 qualifying days do not of U.S. travel restrictions, the following If you are a U.S. citizen or a resident alien have to be consecutive. rules apply. living in a foreign country, you are subject • Any time spent in Cuba can't be to the same U.S. income tax laws that Your tax home is your regular or counted in determining if you qualify under apply to U.S. citizens and resident aliens principal place of business, employment, the bona fide residence or physical living in the United States. or post of duty, regardless of where you presence test. maintain your family residence. If you don't Oct 18, 2020 Cat. No. 11901A Page 2 of 12 Fileid: … ions/I2555/2020/A/XML/Cycle06/source 16:49 - 18-Oct-2020 The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing. • Any income earned in Cuba isn't (China), on or after December 1, 2019, but The automatic 2-month extension also considered foreign earned income. on or before July 15, 2020; or applies to paying the tax. However, you • Any housing expenses in Cuba (or • Any other foreign country on or after will owe interest on any tax not paid by the housing expenses for your spouse or February 1, 2020, but on or before July 15, regular due date of your return. dependents in another country while you 2020; When to claim the exclusion(s). The were in Cuba) aren't considered qualified you will be treated as having met the first year you plan to take the foreign housing expenses. physical presence or bona fide residence earned income exclusion and/or the test if you could establish a reasonable housing exclusion or deduction, you may Note. If you performed services at the expectation that you would have met not yet have met either the physical U.S. Naval Base at Guantanamo Bay, you either test if it had not been for the presence test or the bona fide residence were not in violation of U.S. travel COVID-19 emergency. restrictions. test by the due date of your return Note. To request this waiver for 2020, (including the automatic 2-month Waiver of Time Requirements write "Revenue Procedure 2020-27" extension, discussed earlier). If this If your tax home was in a foreign country across the top margin of your Form 2555. occurs, you can either: and you were a bona fide resident of, or 1. Apply for a special extension to a Example. You arrived in China on physically present in, a foreign country date after you expect to qualify, or September 1, 2019, and reasonably and had to leave because of war, civil expected to work in China until September 2. File your return timely without unrest, or similar adverse conditions, the 1, 2020. You left China on January 10, claiming the exclusion and then file an minimum time requirements specified 2020, due to the COVID-19 emergency. amended return after you qualify. under the bona fide residence and You are eligible for the waiver with respect physical presence tests may be waived. Special extension of time. To apply to the period September 1 through You must be able to show that you for this extension, complete and file Form December 31, 2019, and for the period reasonably could have expected to meet 2350 with the Department of the Treasury, January 1 to January 9, 2020, and thus a the minimum time requirements if you Internal Revenue Service Center, Austin, qualified individual, if you meet the other hadn't been required to leave. Each year, TX 73301-0045, before the due date of requirements of the foreign earned income the IRS will publish in the Internal your return.
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