FEIE-- bonus paid for prior year

[calcpin]

I'm a bit confused due to a bonus that was paid out in 2021 for work done in 2020. I read the instructions for Form 2555, and it advises that I can excludethe bonus IF it would have been excludable in 2020 (it was, and I have already amended the 2020 return to add in this bonus). 

Based on the instructions, I added the bonus to Line 45 of the 2555 on the 2021 return and did not include the amount in Part IV. The bonus amount was then added in to Line 8 on the 1040, but somehow I'm thinking that my total income shouldn't be reduced by the bonus-- rather, shouldn't it just not be factored in?

Just as an example, let's say my 2021 wages on the statement provided by my employer were (110,000), of which 95,000 was regular earnings and the bonus was an extra 15,000. Shouldn't the 2555 just list 95,000 in Part IV without me then adding 15,000 in Line 45? What ended up happening is the amount on Line 8 was the 95,000 + 15,000 = 110,000. 

[ZoltanB45]

As you mentioned, if the bonus wasn't taxable in the year it was earned, it won't be taxable the year received. If the wages or any other income line on the 1040 includes the bonus amount, then box 8 would need to reduce the total by that said amount (in this case, an extra 15,000). If the bonus was not included i any line prior to line 8, then you are correct. You would delete the bonus from line 45 of the 2555.

[calcpin]

Thanks for the reply. I'm just very confused as to why the instructions for the 2555 advise to list it in that section:

"Income earned in prior year. Foreign
earned income received in 2021 for
services you performed in 2020 can be
excluded from your 2021 gross income if,
and to the extent, the income would have
been excludable if you had received it in
2020.
If you are excluding income under this
rule, do not include this income in Part IV.
Instead, attach a statement to Form 2555
showing how you figured the exclusion.
Enter the amount that would have been
excludable in 2020 on Form 2555 to the
left of line 45. Next to the amount, enter
“Exclusion of Income Earned in 2020.”
Include it in the total reported on line 45. "

Would it suffice to attach a statement explaining the calculation or will the fact that I did not report it on the 1040 be an issue?

[ThomasM125]

If the bonus was not reported to the IRS, on a W-2 form for instance, then it won't pose an issue since they will not know of the income. In that case, you could just keep documentation supporting the non-taxable treatment of it in case you get audited. However, the letter of the law says you should attach an explanation to form 2555, so that would be the preferred course of action.