TurboTax just updated the form 2555 (Foreign Earned Income Exclusion) with the updates for 2020 (Covid-19 emergency relief waiver). I clicked on this box because we had to leave our foreign tax home due to Covid-19. The questionnaire immediately navigated me to the Physical Presence Test, even though we only qualify for foreign earned income exclusion with the Bona Fide Resident Test. Is this a technical glitch in the software online and how can I revise the form to show that we were Bona Fide Residents?
If you have not filed, to return to the Foreign Income section in the program. Here are the steps:
In TurboTax online,
After you enter the information, if you qualify for a foreign earned income exclusion, the program will prompt you to continue to the Foreign Income Exclusion section. It will generate a Form 2555. To qualify, you have to live outside the United States for at least 330 days during 12 consecutive months. For more information, please see Foreign income and exclusion and Extension.
You would use Form 2555 to calculate the excludable portion of your foreign income that you made and the housing exclusion deduction while working on foreign soil. For 2020, the maximum exclusion amount has increased to $107,600. Due to the global health emergency caused by COVID-19, the IRS has provided relief related to the time requirement necessary to meet either the bona fide residence test or physical presence test. To learn more, click here: https://www.irs.gov/instructions/i2555
Hi, thank you for the response. You don't have to live outside the US for 330 days in 12 consecutive months if you have already established "Bona Fide residency" by residing in the foreign country for an entire tax year (this year or a prior year). Once you have established Bona Fide residency, it applies until you 'abandon' this residency. This is my tenth year living overseas and we never use the 330 day rule for filing.
What I was saying was that when I click on the "I had to leave the country due to the Covid-19 emergency", it does not allow me to fill out the part of the form 2555 about "Bona Fide" residency. The Physical Presence test is the 330 day rule, the Bona Fide residency test does not require this. There seems to be a glitch in the Turbo Tax questionnaire.