Foreign income tax exclusion and the INS

Dear Tax Talk,
I am a permanent resident applying for citizenship. The Immigration and Naturalization Service is having issues regarding my argument of claiming the foreign earned income exclusion when I worked overseas. I left the United States on March 1, 1993, and returned to the country for a vacation Dec. 22, 1994. I went back overseas Jan. 3, 1995, and returned Aug. 22, 1995. I have not left the United States since my return. I never sent in the Form 2555 for tax years 1993, 1994 and 1995. My foreign gross earnings were $9,310 for 1993, $20,000 for 1994 and $17,333 for 1995. I was married filing jointly with two kids under 17 during 1993, 1994 and 1995. Do I need to file the Form 2555 along with amended 1993 and 1995 returns? -- Chris

Dear Chris,
An individual employed abroad can claim exclusion for foreign wages if they meet either the substantial foreign presence test or, in the case of a U.S. citizen, the bona-fide foreign resident test.

Since you're going for citizenship now, you could have only met the substantial foreign presence test. It's my understanding that INS doesn't like resident aliens to be outside the country for long periods of time and that by claiming the exclusion you could be denying yourself the opportunity to apply for citizenship.

I'm confused though on whether you filed for the exclusion or not. You seem to be saying that you claimed the exclusion and just didn't file the proper form. But whatever the case is, it is too late to go back and amend your tax returns for 1993 and 1995. You have three years from the date that you filed the original return to file an amended return.

If the IRS didn't disagree with what you originally did, then INS should not have an issue either.