If you are a U.S. citizen or a resident alien of the United States and you live abroad, you are taxed on your worldwide income. However, for US tax purposes, you may qualify to exclude from your income up to the foreign earned income exclusion amount for that tax year. In addition, you may be able to exclude or deduct a portion of certain foreign housing amounts.
Follow these steps to report your foreign income and take the exclusions and deductions:
1. If you don't have an account with us, the first thing to do is to create an account begininng at our homepage.
2. Within your tax return, report all of your income regardless where you earned it. All types of income are to be reported within the Income section. Click the Income Tab at the top of the screen to go to the Income section. For each type of income you received, you need to report it next to the correct line. For example, if you have a wages reported on W-2, then enter it under "Wages, Salaries, Tips, etc".
3. If you earned foreign wages or other type of foreign income but you don't have a W-2 for the wages, or the required documentation, first check with the employer if a document for that income should have been issued. Otherwise, you will need to report the wages in the Income Section at FEC (foreign earned compensation) in the section for "Wages, Salaries, Tips, etc".
To exclude foreign earned compensation, complete form 2555 in the "other income" section, complete all applicable sections.