Form 2555 calculation of foreign income under 330 day rule

Forum|Forum|11 months ago
April 8, 2025
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I am not sure that TT is filling out the form 2555 correctly. Facts are as follows:

--US cit who lives, works and have tax home is foreign country since 2021

--been using 330 day rule vice bone fide resident because visas are based on limited employment (3 year contracts) and have read that is enough to not be a bone fide resident

--Foreign employer sent me to US for 3 months (Feb-March 2024). Salary paid by foreign empoyer during that time is about 16.5K (annual is 66,5k) and then I returned to foreign country for rest of years

--can use 12 month period May 2024 to May 2025 to establish 330 in foreign country (avoid the 3 months in US) for FEIE.

--I put full salary in "other" income under general income section given that is for calendar year. Then in section to fill out form 2555, list section list the May 2024 -May 2025 to establish foreign presence. tt asks me if I've travelled to the US in THAT 12 Month Period -- so does not exclude the money earned in the early part of 2024 as foreign income and form 2555 still lists my entire salary as exempt. I'm not sure how I have to answer the questions to get it to properly count ¼ as non-foreign income since I was physically in the US and the other ¾ as foreign income. Do I need to correct by hand? If so how?

My one thought: When I look at the actual 2555, I see a "Foreign Source and Salaries Smart Worksheet" where it lists my full 2024 salary from the foreign employer. Section C titled "adjustments" is blank. Should I put the 16.5 K earned while physically in US in that section by hand?

Best answer by DaveF1006

Yes, if you list May 01, 2024 -04/30/2025, you will qualify under the physical presence test. Since you were physically in the U.S. for ¼ of the year, the salary earned during that time does not qualify for the FEIE. You need to manually adjust the income reported on Form 2555 to reflect only the foreign-earned portion.

To manually adjust, there is a screen that shows where you can make that adjustment. Here's a screenshot of the screen where you will make the adjustment. Be sure to report the US wages as a negative number when making the adjustment.

DaveF1006Answer

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chrisghAuthor

I was able to correctly pro-rate the US income. One follow-on question: using May24-May25. Form asks for days in US and if worked during the 12 mo period used. I listed 1 US trip over Christmas/New Years where I worked 2 days in 2025. Even though that period is used for establishing the 33o days, I shouldn’t count the 2 days in 2025 as part of my 2024 income should I?