Taxes and form 2555 Excluding foreign earned income

[Texanadian 10]

I can't speak for the 2555. I only used the 2555-EZ. But on the EZ version on line 17 it asks for foreign income in US dollars.

As for the British-USD exchange rate, you'd want to use 1.8204 as your conversion number,

http://www.federalreserve.gov/releases/g5a/current/

[Jakob 0]

Hey All,

Just wanted to clarify some info as prior posts relating to taxes always refer to using form 2555. As I was contemplating going back and amending my husbands (the USC) income tax returns to married filing jointly and then excluding my Candian income using this form I found out that in 2006 the legislation changed and it is no longer so black and white.

They have changed it so that even though the foreign income will be excluded the income that is to be taxed (eg. my husband's US income) is now taxed at a higher rate - and from what I have read it starts at 25% (previously 10%). Needless to say the couple of hundred I expected to get in a refund had I filed actually would have had us owing.

So for all of you who are like me and have foreign income - it looks like the new favorite choice would be including all of your foreign income in the T1040 and using Form 1116 for the Foreign tax credit.

Obviously, this isn't meant to replace any tax accountants advice, but I wanted to put the warning out there - if you have a tax program run the numbers using the different scenarios instead of soley using Form 2555.

[Jakob 0]

Hey All,

Just wanted to clarify some info as prior posts relating to taxes always refer to using form 2555. As I was contemplating going back and amending my husbands (the USC) income tax returns to married filing jointly and then excluding my Candian income using this form I found out that in 2006 the legislation changed and it is no longer so black and white.

They have changed it so that even though the foreign income will be excluded the income that is to be taxed (eg. my husband's US income) is now taxed at a higher rate - and from what I have read it starts at 25% (previously 10%). Needless to say the couple of hundred I expected to get in a refund had I filed actually would have had us owing.

So for all of you who are like me and have foreign income - it looks like the new favorite choice would be including all of your foreign income in the T1040 and using Form 1116 for the Foreign tax credit.

Obviously, this isn't meant to replace any tax accountants advice, but I wanted to put the warning out there - if you have a tax program run the numbers using the different scenarios instead of soley using Form 2555.