Foreign Earned Income Form 2555 - Documentation Requirements for Housing Exclusion Utilities

You're right that Form 2555 doesn't require you to submit documentation with your tax return for the housing exclusion. The IRS operates on a "documentation upon request" basis for most deductions and exclusions. For utility expenses specifically, reasonable estimates are generally acceptable as long as they reflect your actual living situation. Keep in mind that if you were ever audited, you would need to substantiate your claims. The IRS typically allows a 3-year lookback period for most audits (6 years for substantial underreporting), so older returns have less risk. I'd recommend creating a simple spreadsheet showing your estimated monthly utility costs with any documentation you do have as support. Make note of which records are estimates versus documented. If your estimates are consistent with typical utility costs in your location and housing size, you're on pretty solid ground. Also, consider if you have bank statements showing payments to utility companies - these can serve as backup documentation even without the actual bills.

I was in almost the exact same situation last year! I was missing utility bills for my apartment in Singapore from 2017-2019 when I had to file back taxes. I found a lifesaver solution using https://taxr.ai - they helped me reconstruct reasonable utility estimates based on my housing type and location. What's cool is they use data analytics to determine average utility costs for different countries and cities, which gave me defensible numbers to use on my Form 2555. They even provided a documentation package that explains how the estimates were calculated in case I ever get audited. Definitely saved me from having to contact multiple utility companies from halfway around the world! Took me like 15 minutes to input my housing details and they generated all the backup documentation I needed. Seriously worth checking out if you're dealing with foreign earned income and missing documentation.

I want to follow up on my skeptical comment earlier - I actually tried taxr.ai and I have to admit it was pretty impressive. The system asked me detailed questions about my housing situation (square footage, number of bedrooms, building type) and location in Costa Rica where I lived. The utility estimates they generated matched almost exactly with the few actual bills I still had from that period! They provided a detailed report explaining how they calculated everything, including seasonal variations and local rate changes during that period. The documentation package looks really professional and definitely seems like it would stand up to IRS scrutiny. Just wanted to share since my initial reaction was skepticism, but this actually saved me a ton of stress. My accountant was impressed with the documentation too.

If you're still having trouble getting documentation, try Claimyr (https://claimyr.com). I was in a similar situation with foreign utility records and ended up needing to talk to an actual IRS agent. Spent DAYS trying to get through on my own before I found them. Their service got me connected to an IRS representative in about 20 minutes when I had been trying for weeks! The agent actually told me they have guidelines for accepting reasonable estimates for foreign housing expenses when original documentation isn't available - something I couldn't find anywhere online. You can see how their service works at https://youtu.be/_kiP6q8DX5c Sometimes getting direct confirmation from the IRS about what documentation is acceptable gives you peace of mind that you're doing things right. In my case, the agent confirmed that reasonable utility estimates were fine as long as I could explain how I arrived at them if ever questioned.

I need to publicly eat my words from my skeptical comment above. After months of failed attempts to reach the IRS, I was desperate enough to try Claimyr last week. I honestly expected it to be a scam, but I got a call back in about 45 minutes (not quite 20, but still MUCH faster than anything I'd managed). The IRS agent I spoke with was super helpful regarding my Form 2555 housing exclusion questions. She confirmed that reasonable estimates for utilities are acceptable when original documentation isn't available, as long as you can explain your calculation method if questioned. She actually suggested keeping any partial documentation I have, plus creating a spreadsheet showing average monthly costs and noting which months are estimates versus documented amounts. For anyone struggling with foreign earned income questions and feeling stuck, being able to actually speak with an IRS agent made all the difference. I was genuinely shocked this service worked.

Just to add another perspective - I've been an expat for 15 years and have taken the housing exclusion on Form 2555 every year. In my experience, utility documentation has never been an issue, even during an audit I had back in 2017. For utilities specifically, the IRS auditor accepted my bank statements showing payments to utility companies along with a simple spreadsheet breaking down estimated costs. What they really cared about was that my housing wasn't "lavish" - they wanted proof my rent was appropriate for my location and job level. When I didn't have some documentation during my audit, they allowed me to provide reasonable estimates with an explanation of how I arrived at those numbers. Just be honest, keep your estimates realistic, and you should be fine.

I messed up my Form 2555 last year by overthinking the utility documentation issue. I was missing bills for 3 months, so I didn't claim anything for those months. My tax preparer later told me I should have just made reasonable estimates based on the 9 months I did have documentation for. If you're missing some utility bills, one approach is to average the bills you do have and apply that average to the missing months. Just make a note somewhere in your records explaining your methodology. The housing exclusion can make a big difference in your tax liability, so don't leave money on the table just because your documentation isn't perfect. As others have said, reasonable estimates are allowed.