2555 Trouble

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blittle
Posts: 7
Joined: Wed Jul 13, 2016 10:14 am

2555 Trouble

Post by blittle »

Hi there,

I’m a Canadian resident and citizen that moved to the US on March 1, 2022. I’ve lived in Canada for over 10 years. I will file the required departure return, etc. on the Canadian side. Before I left Canada, I made about $90K of Canadian self-employment income. I plan to file a full year 1040, and try to either exclude my Canadian income and/or take foreign tax credits.

My question is regarding the formula they use on Form 2555. Is the number of days in my qualifying period 365, or only 60 days (January 1, 2022 to March 1, 2022)? Should I use the Bona Fide Residence or Physical Presence test?

If it makes a difference, I should add that I was in the US for about 160 days in 2021 on a short work assignment (various days between January 2021 to July 2021). I was basically a cross border commuter for part of 2021.

I’m not sure I can use the Physical Presence test. I was not present in a foreign country for 330 days during a period of 12 consecutive months.
If I can only use 60 days for this calculation, I assume I would just use Form 1116 to offset some or all of the remaining tax on this income?

Any help would be appreciated.

Thank you.

Brian
nelsona
Posts: 18415
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Re: 2555 Trouble

Post by nelsona »

I think you are stuck using 1116 for your earned income.
you only get the 60 days, max on 2555 which will hardly be worth it, since you would need to use 1116 for the surplus in any event.
Or, you could file dual-status, and exclude the income all together on your part-year 1040NR.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
blittle
Posts: 7
Joined: Wed Jul 13, 2016 10:14 am

Re: 2555 Trouble

Post by blittle »

Ok, thanks very much for confirming. I appreciate your insight.
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