Tax question 2555

Ok, I have no idea what I'm doing.  I did 1040 so far - now stuck on 2555.  Converted into US dollars I made $4,940 last year.  I am MFS.  I don't have to fill out any part of the 2555 dealing with exclusion because I didn't make over $99,200 right? Or do I fill it out anyway and basically zero everything out?  (I am hoping not because because I tried this and it told me to go back and do things on 1040 that would make no sense with my totals.)  Like I say I have no idea and reading through the publications/directions isn't making the greatest sense to me.

If you choose FEIE rather than tax credits, you fill out 2555. It's not just for income OVER $99,200....that's just the maximum that is eligible for FEIE exclusion (or so I assume - personally haven't used FEIE for >20 years).

First, if your total income (earned income plus non-earned income such as interest, etc.) is less than $10,150 for tax year 2014, you don't really need to file Form 2555 or 2555EZ. Your total income is below the sum of your standard deduction plus personal exemption. Work through 1040, list your income, and then subtract std. deduct. and pers. exempt. The result should be $0 tax due. Include Schedule B and 8965 with 1040 and you're done provided there are no other sources of income, assets, etc. that require additional forms.

But hey, where's the fun in that!

If you wish to establish foreign income reporting for both now and in the future, you need to file either 1116 or 2555 (or 2555EZ). If you elect to use 2555 (or 2555EZ), computations on both must be made. They determine how much you are allowed to exclude up to a maximum of $99,200 (as vadio said). In your case, you need to establish you have $4,940 allowable excludable foreign income. Have you tried 2555EZ? It's pretty, well, easy, provided you do not have self-employment income. On both forms, the exercise is how 1) much did you earn?, 2) were there any days you worked in the US during the year whilst receiving this income? 3) is it less than $99,200?, 4) if it is less, how much is it?, 5) that's the amount you're allowed to exclude.

That's a very simplistic explanation, and everyone's situation is different causing alterations or additions to the above, but for a simple salary, it is a good start. 

Quick question: in previous years, my wife has filed 2555 to exclude her earned income. In 2014, she had no earned income (and minimal unearned income). So she is not planning to file 2555, on the grounds that you can't exclude what doesn't exist.

Will this count as a 'revocation' of the FEIE, and prevent her from filing it next year, should she want to?

Many thanks

Thanks, I filled in part 1-5 and left the rest N/A on the 2555.  Hopefully that works.  This whole tax thing puts me in a dither like you wouldn't believe.  I begin questioning things that are rational and begin overthinking it.

Thanks, I filled in part 1-5 and left the rest N/A on the 2555.  Hopefully that works.

Unfortunately, filing form 2555 is a worthless exercise unless parts 7 and 8 are also completed. What have you put on form 1040, lines 7, 21, and 22? Again, since your total income may be below $10,150, an IRS agent having a good day may simply decide you owe no tax (which you wouldn't if total income is below $10,150), make some alterations, and allow the return to go forward without further question. Good luck.

You are not entitled to have tax free foreign income unless you correctly file either a deduction, exclusion, or offset of foreign taxes.

Perhaps it's time to consider seeking assistance in preparing these returns. If in future years your foreign income is larger than $10,150, you'll need to get this right.

Will this count as a 'revocation' of the FEIE, and prevent her from filing it next year, should she want to?

A good question.

Is she filing a return at all for 2014?

Yes. Her income is below the filing threshold, but she is obliged to file the Fincen 114 (which she has already done), so (I think?) she needs to tick the box on 1040 Schedule B and file it. She also wants to keep up a record of filed returns.

Yes. Her income is below the filing threshold, but she is obliged to file the Fincen 114 (which she has already done), so (I think?) she needs to tick the box on 1040 Schedule B and file it. She also wants to keep up a record of filed returns.

I don't have the official answer. I can only guess that not filing would not constitute "revoking" the exclusion (and yes, line 6b of 2555 is the sticking point). But logic and IRS is an oxymoron.

If your wife is filing a return, she could always file 2555, claim the bona fide residence test, and complete the form with $0 as earned income. There is no charge for being overly cautious with the reason being of continuing the claim of bona fide residence, and perhaps somewhat satisfyingly, it may create extra work for the IRS with their obtuse instructions.

Thanks. I just hope there's no chance they think she's being too clever by filing a 2555 for zero income? Well as you say, it's good to establish continuation of bona-fide residency.