Publication 54 - Tax Guide For U.s. Citizens And Resident Aliens Abroad - 2006 Page 14
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44Example 3. You are a U.S. citizen em-
date you actually began the residence and end-
You do not meet the physical presence test if
ployed in Japan by a U.S. employer under con-
ing with the date you abandon the foreign resi-
illness, family problems, a vacation, or your em-
tract with the U.S. Armed Forces. You are
dence. You could qualify as a bona fide resident
ployer’s orders cause you to be present for less
subject to the agreement of the Treaty of Mutual
for an entire tax year plus parts of 1 or 2 other tax
than the required amount of time.
Cooperation and Security between the United
years.
Exception. You can be physically present
States and Japan. You do not qualify as a bona
in a foreign country or countries for less than 330
Example. You were a bona fide resident of
fide resident.
full days and still meet the physical presence
Singapore from March 1, 2004, through Sep-
test if you are required to leave a country be-
Example 4. You are a U.S. citizen em-
tember 14, 2006. On September 15, 2006, you
cause of war or civil unrest. See Waiver of Time
ployed as an “official” by the United Nations in
returned to the United States. Since you were a
Requirements, later.
Switzerland. You are exempt from Swiss taxa-
bona fide resident of a foreign country for all of
tion on the salary or wages paid to you by the
2005, you also qualify as a bona fide resident
Full day. A full day is a period of 24 consecu-
United Nations. This does not prevent you from
from March 1, 2004, through the end of 2004
tive hours, beginning at midnight.
qualifying as a bona fide resident if you meet all
and from January 1, 2006, through September
the requirements for that status.
14, 2006.
Travel.
When you leave the United States to
Reassignment. If you are assigned from
Effect of voting by absentee ballot. If you
go directly to a foreign country or when you
one foreign post to another, you may or may not
are a U.S. citizen living abroad, you can vote by
return directly to the United States from a foreign
have a break in foreign residence between your
absentee ballot in any election held in the United
country, the time you spend on or over interna-
assignments, depending on the circumstances.
States without risking your status as a bona fide
tional waters does not count toward the 330-day
resident of a foreign country.
total.
Example 1. You were a resident of Pakistan
However, if you give information to the local
from October 1, 2005, through November 30,
election officials about the nature and length of
Example. You leave the United States for
2006. On December 1, 2006, you and your fam-
your stay abroad that does not match the infor-
France by air on June 10. You arrive in France at
ily returned to the United States to wait for an
mation you give for the bona fide residence test,
9:00 a.m. on June 11. Your first full day of
assignment to another foreign country. Your
the information given in connection with absen-
physical presence in France is June 12.
household goods also were returned to the
tee voting will be considered in determining your
Passing over foreign country. If, in travel-
United States.
status, but will not necessarily be conclusive.
ing from the United States to a foreign country,
Your foreign residence ended on November
you pass over a foreign country before midnight
Uninterrupted period including entire tax
30, 2006, and did not begin again until after you
of the day you leave, the first day you can count
year. To qualify for bona fide residence, you
were assigned to another foreign country and
toward the 330-day total is the day following the
must reside in a foreign country for an uninter-
physically entered that country. Since you were
day you leave the United States.
rupted period that includes an entire tax year. An
not a bona fide resident of a foreign country for
entire tax year is from January 1 through De-
the entire tax year of 2005 or 2006, you do not
Example. You leave the United States by
cember 31 for taxpayers who file their income
meet the bona fide residence test in either year.
air at 9:30 a.m. on June 10 to travel to Kenya.
tax returns on a calendar year basis.
You may, however, qualify for the foreign
You pass over western Africa at 11:00 p.m. on
During the period of bona fide residence in a
earned income exclusion or the housing exclu-
June 10 and arrive in Kenya at 12:30 a.m. on
foreign country, you can leave the country for
sion or deduction under the physical presence
June 11. Your first full day in a foreign country is
brief or temporary trips back to the United States
test, discussed later.
or elsewhere for vacation or business. To keep
June 11.
your status as a bona fide resident of a foreign
Example 2. Assume the same facts as in
Change of location. You can move about
country, you must have a clear intention of re-
Example 1, except that upon completion of your
from one place to another in a foreign country or
turning from such trips, without unreasonable
assignment in Pakistan you were given a new
to another foreign country without losing full
delay, to your foreign residence or to a new bona
assignment to Turkey. On December 1, 2006,
days. If any part of your travel is not within any
fide residence in another foreign country.
you and your family returned to the United
foreign country and takes less than 24 hours,
States for a month’s vacation. On January 2,
you are considered to be in a foreign country
Example 1. You arrived with your family in
2007, you arrived in Turkey for your new assign-
during that part of travel.
Lisbon, Portugal, on November 1, 2004. Your
ment. Because you did not interrupt your bona
assignment is indefinite, and you intend to live
fide residence abroad, you meet the bona fide
Example 1. You leave Ireland by air at
there with your family until your company sends
residence test.
11:00 p.m. on July 6 and arrive in Sweden at
you to a new post. You immediately established
5:00 a.m. on July 7. Your trip takes less than 24
residence there. On April 1, 2005, you arrived in
Physical Presence Test
hours and you lose no full days.
the United States to meet with your employer,
leaving your family in Lisbon. You returned to
Example 2. You leave Norway by ship at
You meet the physical presence test if you are
Lisbon on May 1, and continued living there. On
10:00 p.m. on July 6 and arrive in Portugal at
physically present in a foreign country or coun-
January 1, 2006, you completed an uninter-
6:00 a.m. on July 8. Since your travel is not
tries 330 full days during a period of 12 consecu-
rupted period of residence for a full tax year
within a foreign country or countries and the trip
tive months. The 330 days do not have to be
(2005), and you meet the bona fide residence
takes more than 24 hours, you lose as full days
consecutive. Any U.S. citizen or resident alien
test.
July 6, 7, and 8. If you remain in Portugal, your
can use the physical presence test to qualify for
next full day in a foreign country is July 9.
the exclusions and the deduction.
Example 2. Assume the same facts as in
The physical presence test is based only on
Example 1, except that you transferred back to
In United States while in transit. If you are
how long you stay in a foreign country or coun-
the United States on December 13, 2005. You
in transit between two points outside the United
tries. This test does not depend on the kind of
would not meet the bona fide residence test
States and are physically present in the United
residence you establish, your intentions about
because your bona fide residence in the foreign
States for less than 24 hours, you are not treated
returning, or the nature and purpose of your stay
country, although it lasted more than a year, did
as present in the United States during the
abroad.
not include a full tax year. You may, however,
transit. You are treated as traveling over areas
qualify for the foreign earned income exclusion
not within any foreign country.
330 full days. Generally, to meet the physical
or the housing exclusion or deduction under the
presence test, you must be physically present in
physical presence test (discussed later).
How to figure the 12-month period.
There
a foreign country or countries for at least 330 full
are four rules you should know when figuring the
Bona fide resident for part of a year. Once
days during a 12-month period. You can count
12-month period.
you have established bona fide residence in a
days you spent abroad for any reason. You do
•
foreign country for an uninterrupted period that
not have to be in a foreign country only for
Your 12-month period can begin with any
includes an entire tax year, you will qualify as a
employment purposes. You can be on vacation
day of the month. It ends the day before
bona fide resident for the period starting with the
time.
the same calendar day, 12 months later.
Page 14
Chapter 4 Foreign Earned Income and Housing: Exclusion – Deduction
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