Form 2555 - PDF link to the form from the USA government on the Foreign Earned Income exclusion that allows you to earn up to 91,500 in 2010.
Tue, 8 Mar 2011 06:50:13
Form 2555 on PDF
Form 2555 (entitled Foreign Earned Income) is an Internal Revenue Service form filed by taxpayers who have earned income from sources outside the United States exempt from U.S. income tax.
A U.S. citizen or a U.S. resident alien living in a foreign country is subject to the same U.S. income tax laws that apply to citizens and resident aliens living in the United States. For those who qualify, however, Form 2555 can be used to exclude foreign earned income up to US $87,600 for 2008, $91,400 for 2009, $91,500 for 2010, and $92,900 for 2011. Also, it can be used to claim a housing exclusion or deduction. A filer cannot exclude or deduct more than their foreign earned income for the tax year.
The "earned" part of the exclusion means you had to actually work to earn the excluded income. Interest, Dividends, Rental Income, etc. cannot be excluded.