I'm aware of the thread here thread-6236.html about the foreign earned income exclusion for USA tax payers, however all the discussion in that thread pertains to claiming the foreign earned income exclusion based on the "physical presence test" which means you stayed outside of the USA for 330 days for 12 consecutive months.
There is a second test, the "bona fide residence test", which you can use to claim your foreign earned income exclusion. However this test seems much less straight forward and the IRS website says they determine if you qualify under that test on a case by case basis.
The advantage of claiming the exclusion under the bona fide residence test is that you can come back to the USA for business or vacation more than just 35 days per 12 months, however they don't tell you a specific number of days you can be in the USA and still qualify. From everything I've read the bona fide residence test just means you live outside of the USA for an indefinite amount of time, like there is no scheduled day on when you will be returning to live in the USA, but you also make short trips back to the USA once in awhile.
I've attached an image of what they ask you on the foreign earned income form to determine if you can claim under that test (form 2555).
My question is does anyone have any experience using the bona fide residence test to claim the foreign earned income exclusion? What's the max amount of days you were in the USA and still qualified? Did you pay income tax in the foreign country? It also asks you what type of visa you entered the foreign country and if it limited your stay... any insight on how this affects whether or not you qualify?
The table in #14 only refers to # of days in USA on "business" but I'm assuming you would still have to log it if it was just a vacation (which is also allowed after the 35 days per 12 months limit according to the IRS website - if you qualify under the bona fide test.)
As you can see if you decided to spend more than 35 days in the USA per year assuming you'd still be able to claim the exclusion under the bona fide residence test, and then it comes back that you didn't qualify and now you have to write a fat check to the IRS, that would suck.
I'll probably talk to some accountants before I decide to return past the 35 day limit of the physical presense test but I wanted to see if anyone here had any experience claiming under the bona fide test and what info they can give to determine if we will qualify.
Thanks
There is a second test, the "bona fide residence test", which you can use to claim your foreign earned income exclusion. However this test seems much less straight forward and the IRS website says they determine if you qualify under that test on a case by case basis.
The advantage of claiming the exclusion under the bona fide residence test is that you can come back to the USA for business or vacation more than just 35 days per 12 months, however they don't tell you a specific number of days you can be in the USA and still qualify. From everything I've read the bona fide residence test just means you live outside of the USA for an indefinite amount of time, like there is no scheduled day on when you will be returning to live in the USA, but you also make short trips back to the USA once in awhile.
I've attached an image of what they ask you on the foreign earned income form to determine if you can claim under that test (form 2555).
My question is does anyone have any experience using the bona fide residence test to claim the foreign earned income exclusion? What's the max amount of days you were in the USA and still qualified? Did you pay income tax in the foreign country? It also asks you what type of visa you entered the foreign country and if it limited your stay... any insight on how this affects whether or not you qualify?
The table in #14 only refers to # of days in USA on "business" but I'm assuming you would still have to log it if it was just a vacation (which is also allowed after the 35 days per 12 months limit according to the IRS website - if you qualify under the bona fide test.)
As you can see if you decided to spend more than 35 days in the USA per year assuming you'd still be able to claim the exclusion under the bona fide residence test, and then it comes back that you didn't qualify and now you have to write a fat check to the IRS, that would suck.
I'll probably talk to some accountants before I decide to return past the 35 day limit of the physical presense test but I wanted to see if anyone here had any experience claiming under the bona fide test and what info they can give to determine if we will qualify.
Thanks