Ask Me Help Desk - Does foreign paid unemployment qualify for the Foreign Income Exclusion Form 2555?

Does foreign paid unemployment qualify for the Foreign Income Exclusion Form 2555?

I am a full time expat living outside of the US. I am currently unemployed. In 2016 I received government paid unemployment.

Is unemployment considered income under the terms required for filing form 2555 the Foreign Earned Income Exclusion? Or does unemployment simply not qualify for this exclusion?

You can assume that I meet the residency requirements, I live in a foreign country that has a tax treaty with the United States, and there was tax withholding by the government where I live on the unemployment that they paid me.

Form 2555 is for EARNED Income exclusion; unemployment does not count.

However, since you paid taxes on the unemployment compensation, Form 1116 (Foreign Tax Credit) comes into play.

Thanks for the quick reply. I wish it was different since this leaves me paying even more taxes. But what can you do?

You did help me and I'm thankful for that.

Glad to help!

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