Foreign earned income exclusion?

Question

I have been living in Mexico for 2 years and am a bona fide resident of that country. I have been working for a Mexican company since 2006. I paid income taxes to the Mexican government for 2006. I have checked out forms 2555, 2555-EZ, and Publication 54 on the IRS website and they all imply that I should have filed the 2555-EZ justifying my claim for the foreign earned income exclusion. I only made the equivalent of approximately $4,500 in 2006 and my understanding is that I am able to claim an exclusion for US taxes on up to $82,400 for 2006. However, I am confused because Publication 54 also states that I must file a return if my gross income was at least $3,300 if “married filing separately". I'm in the process of filing for my husband's Green Card so all my taxes have to be in order. Would I have to pay a penalty for filing late even if I don’t owe the IRS any back taxes? Thank you in advance for your assistance.

Answer 1

If you don't owe any taxes there will be no penalty.

If you didn't file Form 2555 with your return, file an amended return ASAP and include the 2555. You must file the 2555 with your return to get the exclusion.

You must file a timely return to claim the FEIE though there are a few exceptions as explained in Pub 54. You can still claim the exclusion on a return filed up to one year late without much trouble.