December 17, 2018, 12:35:41 PM


Author Topic: USA Taxes: Using the Foreign income exclusion form 2555...  (Read 682 times)

Offline xoninmuoshda

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USA Taxes: Using the Foreign income exclusion form 2555...
« on: March 30, 2018, 07:16:34 PM »
Hi everyone.  I have a general question regarding the topic.

I'm using H&R Block's free e-file software to file my taxes.  I wanted to exclude the ~$25,000 I made in Korea.  The Adjusted Gross Income is ~23,000 (amount minus korean taxes).  However, H&R says I will be oweing the IRS ~$470, and I have little idea why.

Only thing that comes to mind is I also have health insurance in the United States and am receiving tax credits on my monthly payment.  The amount my state, where health insurance was purchased, knows I make per month is honestly ~$100 less than what I actually earned while in Korea (my bad) but if the amount I owe has anything to do with this, then I should only owe closer to under $100.  If I gave my state as close to the exact monthly amount I make as possible, the tax credit difference shouldn't be more than $10; insurance premium let's say is $330 and premium tax credit paid is ~$97 but should be ~$87.  And if that's the case, I'd owe only an extra $120 to the IRS.  Not $470.  And if the tax credit amount for my health insurance is wrong by $20, then $20x12(months) is $240.  Still not anywhere near $470.

If anyone out there has some experience, please chime in.  Thanks for reading.
« Last Edit: March 30, 2018, 07:20:38 PM by xoninmuoshda »
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Offline gideonvasquez

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Re: USA Taxes: Using the Foreign income exclusion form 2555...
« Reply #1 on: April 12, 2018, 11:20:46 AM »
I'll try to help if I can but I might need some more information first.

To start with the foreign earned income exclusion and the foreign tax credit are mutually exclusive. You get the credit or the exclusion. If you use form 2555 and you meet the exclusion requirements then your entire income from Korea is excluded. If you only have earned income (salary and wages) from Korea for 2017 you shouldn't have any of that amount included in adjusted gross income. (On form 1040 your income shows up on line 7 $25,000 and as a negative amount on line 21 ($25,000) next to line 21 you should write FORM 2555 and include that form with your return.)

Online lifeisgood6447

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Re: USA Taxes: Using the Foreign income exclusion form 2555...
« Reply #2 on: April 12, 2018, 02:48:59 PM »
I am not sure if you have health coverage just as a safe guard or not, but just to add to what the above user said, and then add a bit more.

The above is correct, and make sure you write in for "Form 2555" on that line on the 1040. Remember you can also not fill out a 1040 EZ, as there is no place to indicate you;re also filing Form2555. If you wish to not have health insurance, you should cancel your coverage, and you won't be held liable (or I mean charged for not having it) if you also file Form8965 Health Coverage Exemption form. I actually find it easiest, and free, just to download the forms from the IRS website, and send them in. It costs all of about 3 dollars to do taxes that way. If you have pretty basic Federal taxes to do, and don't have health coverage, you can basically file just these forms: 1040, 2555-EZ, 8965

Online slycordinator

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Re: USA Taxes: Using the Foreign income exclusion form 2555...
« Reply #3 on: April 13, 2018, 09:09:25 AM »
By the way, if you got health insurance in the States because you're worried about Obamacare requirements, living outside the US automatically makes you exempt from the requirement (whether you get insurance where you are living/working or not).

Online lifeisgood6447

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Re: USA Taxes: Using the Foreign income exclusion form 2555...
« Reply #4 on: April 13, 2018, 12:06:38 PM »
By the way, if you got health insurance in the States because you're worried about Obamacare requirements, living outside the US automatically makes you exempt from the requirement (whether you get insurance where you are living/working or not).

It does. I called the IRS and was told to fill out Form 8965 though. It may be fine without it, but I was told it was required a couple of years ago, so continue to fill it out. I think it is a total of about 3 things to write down, and then the signature.