Deductions & credits

Form 2555 (Foreign Earned Income Exclusion) calculates the amount of foreign earned income and/or foreign housing you can exclude from taxation.  Form 2555-EZ is a simplified version of this form.

Here's how to add or remove a Form 2555 or 2555-EZ from your return:

1. Sign in to TurboTax and open or continue your return.
2. Search for foreign income, then select the Jump to link in the search results.
3. Continue through the foreign income section until you reach Would You Like to Try and Exclude Your Foreign Earned Income? (if single), or Whose Foreign Income Would You Like to Try and Exclude? (if married).
   • Answer Yes to add a Form 2555 or 2555-EZ. We'll figure out which one you need.
   • Answer No to remove a Form 2555 or 2555-EZ.
4. Select Continue, and follow any instructions.

Tip: The -T or -S suffix after the 2555 stands for taxpayer or spouse, respectively.

Let's make sure it was entered correctly.  The exclusion amount should show on line 8 of Schedule 1 and Form 1040.  Please double-check.  Since you have other taxable income, after applying the exclusion, It is possible you might still owe if you did not have enough tax withholding and credits to cover your other income, California wages, etc.  

*** If you qualify for and claim the foreign earned income exclusion, the foreign housing exclusion, or both, must figure the tax on your remaining non-excluded income using the tax rates that would have applied had you not claimed the exclusion(s).    For more information and other rules pertaining to the Foreign Exclusion, click here.