To be eligible to claim the foreign earned income exclusion or the
foreign housing exclusion or deduction, you must have a tax home in a
foreign country and meet either the bona fide residence test or the
physical presence test.
The bona fide residence test can be used by U.S. citizens and U.S.
resident aliens who are citizens or nationals of a country with which
the United States has an income tax treaty. You must be a bona fide
resident of a foreign country or countries for an uninterrupted
period that includes an entire tax year. The characteristics usually
qualifying you as a bona fide resident include establishing a home
and settling in that country with some degree of permanence.
The physical presence test can be used by any U.S. citizen or
resident alien. You must be physically present in a foreign country
or countries for at least 330 full days during any period of 12
consecutive months. The 12-month period can begin with any day of any
calendar month. If you violate U.S. restrictions that prohibit travel
to certain countries, you will not be able to count your presence or
residence in those countries in meeting the bona fide residence test
or the physical presence test.
Generally, your tax home is the general area of your main place of
business or post of duty, regardless of where you maintain your
family home. If you do not have a regular or main place of business
because of the nature of your work, then your tax home may be the
place where you regularly live. You are not considered to have a tax
home in a foreign country for any period for which your household is
in the United States. However, if you are temporarily present in the
United States, it does not necessarily mean that your household is in
the United States during that time.
You qualify for the foreign earned income exclusion only if your tax
home is in a foreign country throughout your period of residence or
your 330 days of physical presence.
For more information on these topics, read Topics 853 and 855.
Publication 54, Tax Guide for U.S. Citizens and Resident Aliens
Abroad, contains detailed information on the foreign earned income
exclusion and other related areas.
If the information you need relating to this topic is not addressed
in Publication 54, you may call the IRS National Office hotline. The
number is (202) 874-1460. This is not a toll-free number.
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