I am an expat living abroad. Turbotax is asking me if I've taken a Foreign Income Exclusion before. How did I know whether I did or didn't?

[SusanY1]

If you filed as an expat living abroad in 2023, look at your tax return to see if you see the inclusion of form 2555.  What matters most with this question is if you have taken it in any of the preceeding 5 years (so, for 2024 filing this would be 2019-2023), as you must continue to use it after the first instance or else you are considered to have "revoked" it, and cannot use it again for at least 5 years.  This doesn't apply if in that period of time you had no income to exclude. 

If this is your first year filing abroad, answer this question No.  Also, if this is your first year filing abroad and you pay taxes where you reside, consider seeing first if you get a better result using the Foreign Tax Credit instead of of the Foreign Earned Income Exclusion.  This can be the most beneficial option for taxpayers who pay higher taxes abroad than they would in the US on the same income, but allows for things like refundable child tax credits (if applicable) and more flexibility in regard to things like IRA or Roth IRA contributions.  

[92esty]

Thank you! So if I don't have the form 2555 in my 2023 taxes, does that mean that I revoked it that year?

[SusanY1]

You would have revoked it in that year if both of these conditions are met:

• You did file it in the years 2018, 2019, 2020, 2021 or 2022
• AND you had foreign income in those years (but chose not to exclude it)

You won't have revoked it if you filed it in a prior year when you had foreign-earned income and then had none to report in subsequent years.  Once revoked, you cannot use the exclusion again for five years unless you first request permission from the IRS.

[92esty]

Thank you. So if I revoked it last year (2023), would it be correct to say that for 2024, 2025, 2026, 2027 I will have to revoke too? And then in 2028 I can use the exclusion again?

[SusanY1]

Yes, you would be able to use it again in 2028.  You could amend your 2023 return if you didn't intend to revoke the election and need to use it again unless permission is obtained from the IRS via the Private Letter Ruling.  

[92esty]

How would I go about changing my 2023 tax return if necessary?

[AmyC]

To amend your 2023, see How do I amend my federal tax return for a prior year?

[92esty]

Thank you!