W2 Box 12 Code V with Form 2555

Forum|Forum|4 years ago
February 2, 2022
1 reply
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Hello,

I prepare my tax return 2021 with TurboTax, I meet some confused problems.

I am tax residence of USA, but I always work and live abroad in whole 2021 year, I receive some options related abroad work.
My only income came from exercised options income (non-statutory stock option) during 2021, it means all of W2 amount are exercised options value.

I import W2 into TurboTax, these options FMV value display on the W2 box 1 & box 12 with code V.
I also claim Form 2555, the TurboTax calculate and exclusion ~$100,000 depends on exact days outside of U.S.

My confused is, does these income eligible to exclusion with Form 2555?

Because I found some answer that options income will report on Schedule D (TurboTax community link ), sounds Form 2555 does not work with Schedule D income.

Moreover, I exercised options and sold them couples week late, it made capital loss totally ~30% of W2 amount in final, does it also deductible from W2 exercised options income?

Thanks.

TurboTax Premier Online

RobertB4444

Level 15

The foreign earned income exclusion does not apply to investments within the US. So your stock sales, if reported on schedule D, would not be exempt from tax due to your living abroad.

If you had an overall loss from the sale of stock you will be able to take $3,000 of that loss against any income that you have for the year that exceeds the foreign earned income exclusion.

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Anonymous

Thank your reply.

This is reason that I confused.

Please allow me explain a little more.
1. My options grant depends on perform service at foreign.
2. My options exercised and sold at HongKong stock market (non U.S. stock market)
3. The employer (Foreign Company U.S. Branch) reported these exercised amount on U.S. W-2 (box 12 code V), and HongKong brokager will report U.S. 1099-B either (unavailable now).
4. I generate capital loss during sold exercised options.

Totally above, I don't know how to fill these information through TurboTax.
I confused that the options value will report as investment income (Schedule D?) or W-2 compensation income (Form 2555 eligible?).

At least, TurboTax generate excludsion (Form 2555) for my tax return now, but I am not sure it is right or not..

LeonardS

Level 14

Only earned income is eligible for exclusion under the Foreign Earned Income Exclusion. Unearned, or inactive, income like pension payouts, interest, capital gains and dividends cannot be included.

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