Hi, I'm a little confused about my US federal tax situation this year. Here's some background information, hoping that's enough. I'm a US green card holder and my wife is a US citizen. I left the US in June 2009 to a foreign country, to work for a foreign company. The US has a tax treaty with. show more Hi,
I'm a little confused about my US federal tax situation this year.
Here's some background information, hoping that's enough.
I'm a US green card holder and my wife is a US citizen. I left the US in June 2009 to a foreign country, to work for a foreign company. The US has a tax treaty with said foreign country.
I understand that I have to file a tax return and declare my foreign earned income along with my US-earned income. However I'm confused as to how to do that.
I've figured out that there are tax exclusions for people living abroad like us: foreign earned income exclusion, housing exclusion, housing deduction; we qualify for none of them because we haven't been outside of the US long enough. We are also planning on coming back to the US permanently in the next few months.
I've also figured out that forms 2555 and 2555EZ are used to report foreign income. I have dismissed 2555EZ because I do not qualify for any of the aforementioned
deductions or exclusions.
That leaves me with form 2555, but it also doesn't make it very clear if I should use it even though I do not qualify for the aforementioned deductions. If you would care to look at form 2555 at http://www.irs.gov/pub/irs-pdf/f2555.pdf I can point out what I'm confused about.
Part I: everything is clear except the mention in bold at the bottom. ("Next, complete either Part II or Part III. ")
Part II: I do not qualify under the Bona Fide Residence Test, so I shouldn't fill this out.
Part III: I do not qualify under the Physical Presence Test, so I shouldn't fill this out either.
but Part I says I should fill out either II or III. What if I can fill neither?
Part IV: everything is clear here
Part V: easy enough. I'm answering No to the question, so I should skip part VI and go to part VII
Part VII: implies I am claiming an exclusion I cannot claim.
So. should I fill out form 2555 at all?
If yes, what parts should I fill out and what parts should I leave blank?
If not, how can I declare my foreign earned income?
And if I do fill it out, how do I figure out what I owe the IRS?
I hope somebody can help before my head explodes.