Foreign Earned Income -- Form 2555

Pardon my ignorance -- I am good at all kinds of things, but I've never been strong on paperwork and every year this tax stuff makes my eyes bleed.

My main question is about form 2555. My wife (USC) and I (UK/US Dual) have been living and working in the UK since the end of 2009. Am I to understand that I must pay taxes to the US government for income I am earning and spending in the UK?

That's really my only question. I am completing 2555-EZ and at the top it's called an 'Exclusion' but I have no idea what exactly is being excluded, and from what. Am I supposed to just take the amount I earned in the UK, convert it to dollars, and stick it in line 7 of my 1040 under 'Wages, Salary, Tips'?

(Oh, and one more thing, since the 1040 requires you to attach a W2 to confirm all amounts earned, and UK employers do not issue W2s, what (if anything) do I attach in order to prove my earnings?)

I would like to know as well! I have left it to last minute to get my act together with this tax business so now I am in panic mode. I will be filling out my forms sometime this week and hope I fill them out right!

I did find a little clarification on another forum -- it seems that the 'Exclusion' is a way of effectively preventing having to pay tax on the first $90,000 of income. If this is true, I am still confused about how I signal on my 1040 that this income is not to be re-taxed in the US. It seems to just want me to convert my UK earnings into $ and then stick 'em onto the 1040 form to be taxed. Can anyone help me work out where on the 1040 I declare these funds to be exempt? (If, indeed, that is what I am supposed to do.)

Seriously, how do people do this every year? I suspect that the IRS has some shady back-room profit sharing seal with H&R Block, along the lines of "If we promise to make the tax system as impenetrable and labyrinthine as possible, thereby sending millions of ordinary citizens scurrying to you for assistance, you have to kick back a certain percentage of your fees to us in return." Everybody wins. Well, almost...

D_A_D, the instruction form for the 2555-EZ has all that information on it, it's really quite straightforward. You don't need to attach any proof of earnings, and there are other threads that tell you the exchange rate to use. It really is as simple as converting to dollars and sticking it into the 1040.

Aye i've just done mine tonight.. yep waiting to last minute myself rofl..
As a nurse I'll never make more than the US allows before being double taxed.
I just use the 2555EZ instructions on that are pretty easy.. and it tells you what box  on the 1040 and what to put next to it . Unless you make over the $90000 you should be paying absolutely nada. I hate hate hate doing it every year. but hey ho thats part of the fun of being a merrican abroad.. even if im dual ameri/scot 

The tricky part comes if you have some other kinds of income that are not excluded. These might include child benefit, money held in ISAs or simply you might be a member of a UK pension plan.

Well I do make $ through monthly payments from the tenant in my rental property in the US, and I am happy to declare these earnings and pay taxes on them, as I did when living Stateside. Glad to hear the 2555-EZ is just as its name suggests. Time to knuckle down and just do this, huh?

Reading this post makes me scary. Guessing where to enter income and where to enter excluded income will cost you more than gambling on zero. Every season, I come across dozens of self-prepared tax returns with the disallowed foreign earned income exclusion and hefty IRS penalties only because of the technical errors on form 2555-EZ. Mind you, those taxpayers were eligible for income exclusion but the IRS is merciless and does not care if you made an innocent mistake.  

If you live in the UK, most probably you don't need form 2555 at all. In the countries with the high income tax rates applying foreign tax credit (http://www.taxesforexpats.com/expat-tax-advice/expat-tax-obligations.html#a5) is more advantageous for most expats. Keep in mind, though, that form 1116 is much more complex and confusing than form 2555 and mistakes are expensive.

By the way, the respondent who plans to exclude his rental income is doomed to be rejected by the IRS. Rental income is not earned income and cannot be excluded.