If you are an expat living and earning income in any part of the world, you might have heard about the Physical Presence Test to get the feie. Yes, to get the Foreign Earned Income Exclusion, you should clear this test.
How is it different from Bona Fide Resident test?
It is true that you will have to qualify in one of the Physical Presence Test and Bona Fide Resident Test. But what makes the former different from the latter. The latter applies to the expats, who live in foreign countries and do not have any idea to get back to the United States. However, in the former case, you will have to just be away from the United States for more than 330 days out of 365 days in a year. So, to qualify for FEIE under this test, you will have to keep in mind about the days of traveling to and from the United States. The good thing about passing this test is that it will greatly bring down and even eliminate your US taxes.
Qualifications to pass Physical Presence Test for FEIE:
To get through the physical presence test, your situation must reflect the following:
- You should either be a citizen or an occupant foreigner in the United States.
- You should be outside the United States and her territories for a minimum of 330 days out of 365 days.
- You should be living in your foreign country, where you work legally.
Rules followed in figuring 365 days for FEIE:
You will qualify in the Physical Presence Test for FEIE only if you do not get into the United States continuously for 330 days out of 365. Here, the 330 days does not include the days you spend on traveling to the US. It is not that 365 days should start from January to December any year. It can be any 330 days continuously you were away from the United States.