What Is Form 2555-S and Who Qualifies to Use It?

U.S. citizens and resident aliens working abroad may be eligible for the Foreign Earned Income Exclusion (FEIE), which allows them to exempt a certain amount of foreign-sourced income from U.S. federal income tax. To claim this benefit, taxpayers must file Form 2555, Foreign Earned Income. A simplified version, Form 2555-EZ, was discontinued by the IRS for tax years after 2018. Consequently, all taxpayers seeking this exclusion must now use the standard Form 2555.

Qualifying to Use Form 2555

To claim the Foreign Earned Income Exclusion using Form 2555, a taxpayer must satisfy two conditions. The first is the Tax Home Test. A tax home is the general area of your main place of business or employment, regardless of where you maintain your family home. To meet this test, your tax home must be in a foreign country throughout your period of bona fide residence or physical presence abroad.

You must also meet either the Bona Fide Residence Test or the Physical Presence Test. The Bona Fide Residence Test applies to a U.S. citizen who is a genuine resident of a foreign country for an uninterrupted period that includes an entire tax year. A U.S. resident alien may also qualify if they are a citizen of a country with which the U.S. has an income tax treaty. This test is based on your intentions about your length and purpose of stay.

The Physical Presence Test requires a U.S. citizen or resident alien to be physically present in a foreign country or countries for at least 330 full days during any period of 12 consecutive months. A full day is a 24-hour period starting at midnight. The 330 qualifying days do not need to be consecutive, allowing for brief trips back to the U.S. or other locations, provided the 330-day threshold is met within a 12-month period.

Information and Calculations for Form 2555

Before beginning Form 2555, you should gather several pieces of information.

• Your full foreign address
• Your employer’s name and address (both U.S. and foreign, if applicable)
• The dates that establish your qualifying period for either the Bona Fide Residence or Physical Presence Test
• A detailed record of any travel to the United States during the tax year, including exact arrival and departure dates

The form requires a calculation of your foreign earned income, which includes wages, salaries, and other amounts received as compensation for personal services rendered in a foreign country. This is distinct from unearned income, such as interest, dividends, or rental income, which does not qualify for the exclusion. For the 2025 tax year, the maximum exclusion amount is $130,000, a figure that is adjusted annually for inflation.

If you were not present in a foreign country for the entire tax year, you must prorate the maximum exclusion limit. This is done by dividing the number of your qualifying days in the tax year by the total number of days in the year, and then multiplying that fraction by the maximum exclusion amount.

In addition to the income exclusion, Form 2555 is used to claim the foreign housing exclusion or deduction. This benefit is for certain housing expenses, such as rent and utilities, that exceed a base amount determined by the IRS. The form requires you to calculate your total foreign housing expenses and then determine the allowable exclusion based on limits that can vary by location.

Filing Form 2555 with Your Tax Return

After completing Form 2555, you must integrate it with your U.S. income tax return, Form 1040. The exclusion amount is reported on Schedule 1, Additional Income and Adjustments to Income.

On the line for “Other income,” write “Form 2555” and enter the exclusion amount as a negative number in parentheses. This reduces your total income, which then flows to your adjusted gross income (AGI) on Form 1040.

Form 2555 must be included with your tax return, whether you file on paper or electronically. Tax software will handle this automatically for e-filing, but for paper returns, the form must be attached. Failing to include Form 2555 means you have not officially claimed the exclusion.

The exclusion lowers your tax bill by reducing the income on which you are taxed. You cannot claim a foreign tax credit or deduction for any foreign income taxes paid on the income you have excluded. If your foreign income exceeds the maximum exclusion, you may be able to claim a foreign tax credit on the taxes paid on the non-excluded portion.