Foreign Income/Tax Handling

[blackcomb_boy]

From Jan 2017 to March 2019 I lived/worked in Canada with zero US income. For 2017 and 2018 tax years, I filed a US tax return using form 2555 and excluded my foreign earned income from US taxation. I moved in 2019 back to the USA (I am a US Citizen and CDN Citizen). How do I handle the 2019 income I earned in Canada on my US tax return? Is this a foreign tax credit, or do I continue to process as foreign earned income exclusion?

[DanaB27 · Accepted solution]

Yes, you can still qualify for the Foreign Earned Income Exclusion (2555) for the income earned while living in Canada. Your 12 month period for the presence test would be March 2018 to March 2019. Please, be aware that the exclusion will be prorated since you were only 3 months outside the US in 2019.