Purpose of Form-If you are a U.S. citizen or a U.S. resident alien living in a foreign country, you are subject to the same U.S. income tax laws that apply to citizens and resident aliens living in the United States. But if you qualify, use Form 2555 to exclude a limited amount of your foreign earned income. Also, use it to claim the housing exclusion or deduction. You cannot exclude or deduct more than your foreign earned income for the tax year.
Who Qualifies? You qualify for the tax benefits available to taxpayers who have foreign earned income if both of the following apply.
You meet the tax home test.
You meet either the bona fide residence test or the physical presence test
Exclusion amount. The maximum foreign earned income exclusion is now adjusted annually for inflation. $108,700 for 2021
For more information on Foreign Earned Income Exclusion and how to meet the tests to qualify for the exclusion, please see https://www.irs.gov/pub/irs-pdf/i2555.pdf
