Choosing the Right US Tax Forms: 2555 or 2555-EZ?


US expats are often mystified by which forms they must file with their US tax return. It gets even more confusing when there are similar forms, with slightly different criteria for who should file them.  This week, David McKeegan, Co-Founder of Greenback, explains the differences between Form 2555 and 2555-EZ so you will know exactly what you need to file come June 16th!

VIDEO TRANSCRIPT

Hi, everybody. My name is David McKeegan. I’m with Greenback Expat Tax Services, and our question today is, “What’s the difference between filing Form 2555 and Form 2555-EZ”?

Form 2555 is the Foreign Earned Income Exclusion. It’s also how you can claim the Foreign Housing Exclusion and deduction, and this gets attached to your Form 1040 when you submit your taxes.

Form 2555 shows how you qualify as an expat, so either for the Bona Fide Resident test or via the Physical Presence test. How much of your foreign earned income can be excluded? For 2014 that is $99,200.

How to figure out the amount of your allowable foreign housing exclusion or deduction? So it will walk you through how to calculate what you can exclude of your foreign housing expenses.

If you’re claiming just the foreign wage exclusion, so if you’re only trying to exclude your income, then you can use form 2555 as long as your income is under the $99,200 threshold.

You can use the EZ form if all of the following apply:

  • You’re a US citizen, Green Card holder or resident alien
  • You have earned wages or salary in a foreign country
  • Your total foreign earned income is $99,200 or less
  • Your filing a calendar-year return
  • No self-employment tax or income
  • No business or moving expenses

Lastly, you can’t claim any foreign housing exclusion or deduction if you’re using the EZ form.

Basically, the EZ form is a short form if you have a very simple situation. You’re just trying to exclude income and you fall under the $99,200 limit. In that case, you can use the EZ form, otherwise you should use the full form.

If you have any questions please let us know. As always we’re happy to answer any questions that come our way. Thank you very much and have a great day.

 

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