To be eligible to claim the foreign earned income exclusion or the foreign housing cost amount exclusion, 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 United States citizens; and
by United States resident aliens who are citizens or nationals of a country
with which the United States has an income tax treaty with an applicable nondiscrimination
clause. 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
which qualify you as a bona fide resident usually include establishing a home
and settling in that country with some degree of permanence.
The physical presence test can be used by any United States 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 on vacation or for your employment, 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 bona fide residence or physical
presence abroad. For more information, refer to Tax Topic 853
Tax Topic 855. Publication 54 (PDF), Tax Guide for U.S.
Citizens and Resident Aliens Abroad, contains detailed information on
the foreign earned income exclusion and other related areas.
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