I am currently working in Germany. I am a US citizen, but my wife is a German national. She is not a registered alien, but she does posses a ITIN for tax purposes. We are filing a joint tax return. Because she does not work for a U. S. entity she does not pay U.S. taxes and therefore does not receive a W2. She does however, work for an German company. I am trying to claim the Foreign Earned Income credit. Does this mean that I have to claim that credit using my W2 information. The tax preparation software that I am using (TaxCut Free File) does not allow for me to claim Foreign Earned Income (form 2555) under her name because she does not have a W2.

MukatA

When you file as Married Filing Jointly, you must both declare your worldwide income on the U.S. tax return. This includes your wife's German Income as well as your foreign income.

You will report foreign wages along with other W2 wages on line 7 of Form 1040. Then by filing form 2555, you will be able to exclude these incomes at line 21 (as negative income). You will complete one 2555 for yourself and one for your wife (for earned incomes).

No free file software will do Form 2555. Also if you have foreign address, then you can't e-file.

AtlantaTaxExpert

Agreed; you probably will need to get professional tax help.

peregrand

MukatA is incorrect. H&R Block's TaxCut software DOES let you file a 2555. I'm doing it now. What is confusing, however, is that you appear to have to file a W2 even if you did not receive one from a foreign employer. I'm confused by this and find the program instructions imprecise in answering questions related to this.

But, rest assured you may not need professional, personal help (yet) just for filling in a 2555.

MukatA

It is my understanding that Free file software will not do Form 2555; I may be incorrect. But to do 2555, you don't need W2. I have done many returns with Form 2555; and that too from the year 2005.

peregrand

So, H&R Block's TaxCut Premium online filing software does allow you to file a 2555 (this is 100% verified). However, their e-file system (whether a result of government rules or inherent programming weaknesses) does not allow you to submit taxes online unless you are also filing a W-2 - which, as MukatA points out, is not required.

This year, for example, i have no W-2 to report but because of that I cannot use the H&R Block system to file because their program requires you to input information and goes so far as to call it an "error" if you leave the W-2 section unchecked and blank. Furthermore, it seems to automatically create a blank and incomplete W-2 if you skip that section. Which is quite aggravating.

This restriction is not spelled out in the H&R Block help section at all.