Form 2555-EZ

Form 2555-EZ

A simplified form that one files with the IRS to claim a foreign earned income exclusion from U.S. taxation of income earned in a foreign country. One may file Form 2555-EZ (instead of Form 2555) if one's foreign income is less than $92,901 (the maximum amount as of 2011), if one is not self-employed, and if one does not claim deductions for moving expenses or housing.
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Unless otherwise stated, the statistics reported in this article are based on data compiled from Form 2555, Foreign Earned Income, Form 2555-EZ, Foreign Earned Income Exclusion, Form 1116, Foreign Tax Credit, and Form 1040, U.S.
Taxpayers reported the remaining $5.1 billion using Form 2555-EZ. Data related to the composition of foreign-earned income are not available on Form 2555-EZ; therefore, the breakdown in the ensuing discussion includes only those amounts reported on Form 2555.
These returns had one or more of the following: a foreign tax credit, an attached Form 1116, foreign-earned income exclusion, housing exclusion or housing deduction, or an attached Form 2555 or Form 2555-EZ. SOI understated the foreign-source income and taxes in this article to the extent that they either were not, or did not, have to be reported on Form 1116 to support the foreign tax credit claimed on Form 1040.
Of the sampled returns, taxpayers filed about 1.8 percent with a foreign tax credit or an attached Form 1116, and 13.7 percent with an attached Form 2555 or Form 2555-EZ, on delinquent returns for tax years prior to 2011.
An individual who elects the exclusion does so on Form 2555 (or Form 2555-EZ, if the circumstances are simple).
The remaining $3.9 billion were reported on Form 2555-EZ. Data related to the composition of foreign-earned income are not available on Form 2555-EZ; therefore, the analysis in the ensuing discussion includes only those amounts reported on Form 2555.
About 1.7 percent of the sampled returns with a foreign tax credit or an attached Form 1116 and 13.2 percent of the sampled returns with an attached Form 2555 or Form 2555-EZ were for tax years prior to 2006, reported on delinquent returns processed during the 2006 filing period.
The sample was stratified based on: (1) the presence or absence of Form 2555, Foreign Earned Income, Form 2555-EZ, Foreign Earned Income Exclusion, and Form 1116, Foreign Tax Credit; (2) presence or absence of other specific forms or schedules; (3) the larger of positive income or negative income; (4) the size of business and farm receipts; and (5) the usefulness of returns for tax policy modeling purposes.
The remaining $3.0 billion were reported on Form 2555-EZ. Data related to the composition of foreign-earned income are not available on Form 2555-EZ; therefore, analysis in the ensuing discussion includes only those amounts reported on Form 2555.
The 2001 data presented in this article are based on a sample of individual income tax returns, Forms 1040, processed during Calendar Year 2002, with either a foreign tax credit, an attached Form 1116, a foreign-earned income exclusion, housing exclusion or housing deduction, or an attached Form 2555 or Form 2555-EZ. Foreign-source income and taxes are understated in this article to the extent that they either were not or did not have to be reported on Form 1116 to support the foreign tax credit claimed on Form 1040.
About 1.7 percent of the sampled returns with a foreign tax credit or an attached Form 1116 and 14.5 percent of the sampled returns with an attached Form 2555 or Form 2555-EZ were for tax years prior to 2001, reported on delinquent returns processed during the 2001 filing period.