Physical Presence Test


To expand upon what you have read about on the foreign earned income exclusion page, we will elaborate on the physical presence test, one of the two tests that can be used to qualify for the foreign earned income exclusion.

How To Qualify For The Physical Presence Test

To meet the physical presence test, you must be physically present in a foreign country or countries 330 full days during a period of 12 consecutive months. While the months must be consecutive, the days do not. What this means is that you are limited to a maximum of 35 days in the United States during the 12-month qualifying period. Full days are defined as a 24-hour period beginning at midnight. Time spent on or over international waters in transit to or from the United States does not count towards a day present in a foreign country. You can count all full days you spent abroad for any reason. Whether you spent days in a foreign country or foreign countries for personal or business reasons are not relevant, however you must spend each of the 330 full days in a foreign country.

12-Month Physical Presence Period

There are four rules you should know when figuring the 12-month physical presence period:

  1. Your 12-month period is not limited to a calendar year period (i.e. January 1 – December 31), it can begin with any day of the month. It ends the day before the same calendar day, 12 months later.
  2. Your 12-month period must be made up of consecutive months. Any 12-month period can be used if the 330 days in a foreign country fall within that period.
  3. You do not have to begin your 12-month period with your first full day you arrive or end with the day you leave, but rather you can choose the 12-month period that gives you the greatest exclusion.
  4. 12-month periods can overlap one another and can differ from tax year to tax year.

Tax Home

The physical presence test is based only on how long you stay in a foreign country or countries. It does not depend on the kind of residence you establish, your intentions about returning to the United States, or the nature and purpose of your stay abroad. However, your intentions with regard to the nature and purpose of your stay abroad are relevant in determining whether you meet the tax home test.

Your tax home is the general areas of your main place of business, employment or post of duty, regardless of where you maintain your family home. If there is no regular place of business, your tax home is the place where you regularly live.


 

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35 Days Or Less In The United States

After you establish that your tax home is in a foreign country, plan your trips, whether vacations or business trips, to the United States accordingly. If you plan such trips without keeping the physical presence test in mind, you may lose out on qualifying for the major tax benefit for U.S. citizens living abroad.

The physical presence test, like the bona fide residence test, comprises one way that an individual can qualify for the foreign earned income exclusion . You may still qualify under the bona fide residence test if you do not qualify for the physical presence test.

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Tax Samaritan is a team of Enrolled Agents with over 25 years of experience focusing on US tax preparation and representation. We maintain this tax blog where all articles are written by Enrolled Agents. Our main objective is to educate US taxpayers on their tax responsibilities and the selection of a tax professional. Our articles are also designed to help taxpayers looking to self prepare, providing specific tips and pitfalls to avoid.

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Randall Brody is an enrolled agent, licensed by the US Department of the Treasury to represent taxpayers before the IRS for audits, collections and appeals. To attain the enrolled agent designation, candidates must demonstrate expertise in taxation, fulfill continuing education credits and adhere to a stringent code of ethics.

Every effort has been taken to provide the most accurate and honest analysis of the tax information provided in this blog. Please use your discretion before making any decisions based on the information provided. This blog is not intended to be a substitute for seeking professional tax advice based on your individual needs.