Publication 54 - Tax Guide For U.s. Citizens And Resident Aliens Abord - 2011 Page 40
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4414) In 2006, I qualified to exclude
with you, the type of visa, the em-
qualifying period under either the
abroad. Investment income is not
my foreign earned income, but I
ployment agreement, and any
bona fide residence test or physical
earned income. However, you
did not claim this exclusion on
other factor pertinent to show
presence test. If you paid foreign
must include it in gross income re-
the return I filed in 2007. I paid all
whether your stay in the foreign
tax on the income earned abroad,
ported on your Form 1040.
outstanding taxes with the re-
country is indefinite or prolonged.
you may be able to claim that tax as
turn. Can I file a claim for refund
3) My company pays my foreign
a deduction or as a credit against
To claim the foreign earned in-
now?
income tax on my foreign earn-
your U.S. tax.
come exclusion or foreign housing
ings. Is this taxable compensa-
exclusion or deduction under this
It is too late to claim this refund
tion?
6) Can a resident alien of the
test, the period of foreign residence
since a claim for refund must be
United States qualify for an ex-
must include 1 full tax year (usually
filed within 3 years from the date
clusion or deduction under the
Yes. The amount is compensation
January 1 – December 31), but
the return was filed or 2 years from
bona fide residence test or the
for services performed. The tax
once you meet this time require-
the date the tax was paid, which-
physical presence test?
paid by your company should be
ment, you figure the exclusions and
ever is later. A return filed before
reported on Form 1040, line 7, and
the deduction from the date the res-
the due date is considered filed on
Resident aliens of the United
on Form 2555, Part IV, line 22(f) (or
idence actually began.
the due date.
States can qualify for the foreign
on Form 2555-EZ, Part IV, line 17).
earned income exclusion, the for-
3) To meet the qualification of
Meeting the
eign housing exclusion, or the for-
4) I live in an apartment in a for-
“an uninterrupted period which
Requirements
eign housing deduction if they meet
eign city for which my employer
includes an entire taxable year,”
of Either the Bona Fide
the requirements of the physical
pays the rent. Should I include in
do I have to be physically pres-
Residence Test or the
presence test. Resident aliens who
my income the cost to my em-
ent in a foreign country for the
Physical Presence Test
are citizens or nationals of a coun-
ployer ($1,200 a month) or the
entire year?
try with which the United States has
fair market value of equivalent
1) I recently came to Country X to
housing in the United States
an income tax treaty in effect also
No. Uninterrupted refers to the
work for the Orange Tractor Co.
($800 a month)?
can qualify under the bona fide res-
bona fide residence proper and not
and I expect to be here for 5 or 6
idence test.
to the physical presence of the indi-
years. I understand that upon
You must include in income the fair
vidual. During the period of bona
the completion of 1 full year I will
7) On August 13 of last year I left
market value (FMV) of the facility
fide residence in a foreign country,
qualify for an exclusion or de-
the United States and arrived in
provided, where it is provided. This
even during the first full year, you
duction under the bona fide resi-
Country Z to work for the Gordon
will usually be the rent your em-
can leave the country for brief and
dence test. Is this correct?
Manufacturing Company. I ex-
ployer pays. Situations when the
temporary trips back to the United
pected to be able to exclude my
FMV is not included in income are
States or elsewhere for vacation, or
Not necessarily. The law provides
foreign earned income under the
discussed in chapter 4 under Ex-
even for business. To preserve
that to qualify under this test for the
physical presence test because I
clusion of Meals and Lodging.
your status as a bona fide resident
foreign earned income exclusion,
planned to be in Country Z for at
of a foreign country, you must have
the foreign housing exclusion, or
least 1 year. However, I was reas-
5) My U.S. employer pays my sal-
a clear intention of returning from
signed back to the United States
the foreign housing deduction, a
ary into my U.S. bank account. Is
those trips, without unreasonable
and left Country Z on July 1 of
person must be a “bona fide resi-
this income considered earned
delay, to your foreign residence.
this year. Can I exclude any of
dent of a foreign country or coun-
in the United States or is it con-
my foreign earned income?
tries for an uninterrupted period
sidered foreign earned income?
4) I am a U.S. citizen and during
which includes an entire taxable
2010 was a bona fide resident of
No. You cannot exclude any of the
year.”
If you performed the services to
Country X. On January 15, 2011, I
income you earned in Country Z
If, like most U.S. citizens, you
earn this salary outside the United
was notified that I was to be as-
because you were not in a foreign
file your return on a calendar year
States, your salary is considered
signed to Country Y. I was re-
country for at least 330 full days as
basis, the taxable year referred to
called to New York for 90 days
earned abroad. It does not matter
required under the physical pres-
in the law would be from January 1
orientation and then went to
that you are paid by a U.S. em-
ence test.
to December 31 of any particular
Country Y, where I have been
ployer or that your salary is depos-
year. Unless you established resi-
since. Although I was not in
ited in a U.S. bank account in the
Foreign Earned Income
dence in Country X on January 1, it
Country Y on January 1, I was a
United States. The source of sal-
would be more than 1 year before
bona fide resident of Country X
ary, wages, commissions, and
you would be a bona fide resident
1) I am an employee of the U.S.
and was in Country Y on Decem-
other personal service income is
Government working abroad.
of a foreign country. Once you have
ber 31, 2011. My family remained
the place where you perform the
Can all or part of my government
completed your qualifying period,
in Country X until completion of
services.
income earned abroad qualify
however, you are entitled to ex-
the orientation period, and my
for the foreign earned income
clude the income or to claim the
household goods were shipped
6) What is considered a foreign
exclusion?
directly to my new post. Am I a
housing exclusion or deduction
country?
bona fide resident of a foreign
from the date you established bona
No. The foreign earned income ex-
country for 2011, or must I wait
fide residence.
For the purposes of the foreign
for the entire year of 2012 to be-
clusion applies to your foreign
earned income exclusion and the
come one?
2) I understand the physical
earned income. Amounts paid by
foreign housing exclusion or de-
presence test to be simply a mat-
the United States or its agencies to
duction, any territory under the sov-
ter of being physically present in
Since you did not break your period
their employees are not treated, for
ereignty of a country other than the
a foreign country for at least 330
of foreign residence, you would
this purpose, as foreign earned in-
United States is a foreign country.
days within 12 consecutive
continue to be a bona fide resident
come.
Possessions of the United States
months; but what are the criteria
of a foreign country for 2011.
of the bona fide residence test?
are not treated as foreign coun-
2) I qualify for the foreign earned
tries.
5) Due to illness, I returned to the
income exclusion under the
To be a bona fide resident of a
United States before I completed
bona fide residence test. Does
7) What is the source of earned
foreign country, you must show
my qualifying period to claim the
my foreign earned income in-
income?
that you entered a foreign country
foreign earned income exclu-
clude my U.S. dividends and the
intending to remain there for an in-
sion. Can I figure the exclusion
interest I receive on a foreign
for the period I resided abroad?
The source of earned income is the
definite or prolonged period and, to
bank account?
place where the work or personal
that end, you are making your
home in that country. Considera-
No. You are not entitled to any ex-
No. The only income that is foreign
services that produce the income
tion is given to the type of quarters
clusion of foreign earned income
earned income is income from the
are performed. In other words, in-
occupied, whether your family went
since you did not complete your
performance of personal services
come received for work in a foreign
Page 40
Publication 54 (2011)
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