Irs Publication 54 - Tax Guide For U.s. Citizens And Resident Aliens Abroad

Reassignment. If you are assigned from

You are clearly not a resident of Scotland in

absentee ballot in any election held in the United

the first instance. However, in the second, you

States without risking your status as a bona fide

one foreign post to another, you may or may not

are a resident because your stay in Scotland

resident of a foreign country.

have a break in foreign residence between your

appears to be permanent. If your residency is

assignments, depending on the circumstances.

However, if you give information to the local

not as clearly defined as either of these illustra-

election officials about the nature and length of

Example 1. You were a resident of Pakistan

tions, it may be more difficult to decide whether

your stay abroad that does not match the infor-

from October 1, 2007, through November 30,

you have established a bona fide residence.

mation you give for the bona fide residence test,

2008. On December 1, 2008, you and your fam-

the information given in connection with absen-

Determination. Questions of bona fide resi-

ily returned to the United States to wait for an

tee voting will be considered in determining your

dence are determined according to each individ-

assignment to another foreign country. Your

status, but will not necessarily be conclusive.

ual case, taking into account factors such as

household goods also were returned to the

your intention, the purpose of your trip, and the

United States.

Uninterrupted period including entire tax

nature and length of your stay abroad.

Your foreign residence ended on November

year. To meet the bona fide residence test,

To meet the bona fide residence test, you

30, 2008, and did not begin again until after you

you must reside in a foreign country or countries

must show the Internal Revenue Service (IRS)

were assigned to another foreign country and

for an uninterrupted period that includes an en-

that you have been a bona fide resident of a

physically entered that country. Since you were

tire tax year. An entire tax year is from January 1

foreign country or countries for an uninterrupted

not a bona fide resident of a foreign country for

through December 31 for taxpayers who file

period that includes an entire tax year. The IRS

the entire tax year of 2007 or 2008, you do not

their income tax returns on a calendar year ba-

decides whether you are a bona fide resident of

meet the bona fide residence test in either year.

sis.

a foreign country largely on the basis of facts

You may, however, qualify for the foreign

you report on Form 2555. IRS cannot make this

During the period of bona fide residence in a

earned income exclusion or the housing exclu-

determination until you file Form 2555.

foreign country, you can leave the country for

sion or deduction under the physical presence

brief or temporary trips back to the United States

test, discussed later.

Statement to foreign authorities. You are

or elsewhere for vacation or business. To keep

not considered a bona fide resident of a foreign

your status as a bona fide resident of a foreign

Example 2. Assume the same facts as in

country if you make a statement to the authori-

country, you must have a clear intention of re-

Example 1, except that upon completion of your

ties of that country that you are not a resident of

turning from such trips, without unreasonable

assignment in Pakistan you were given a new

that country, and the authorities:

delay, to your foreign residence or to a new bona

assignment to Turkey. On December 1, 2008,

•

Hold that you are not subject to their in-

fide residence in another foreign country.

you and your family returned to the United

come tax laws as a resident, or

States for a month’s vacation. On January 2,

Example 1. You arrived with your family in

•

2009, you arrived in Turkey for your new assign-

Have not made a final decision on your

Lisbon, Portugal, on November 1, 2006. Your

ment. Because you did not interrupt your bona

status.

assignment is indefinite, and you intend to live

fide residence abroad, you meet the bona fide

there with your family until your company sends

residence test.

Special agreements and treaties. An income

you to a new post. You immediately established

tax exemption provided in a treaty or other inter-

residence there. You spent April of 2007 at a

Physical Presence Test

national agreement will not in itself prevent you

business conference in the United States. Your

from being a bona fide resident of a foreign

family stayed in Lisbon. Immediately following

You meet the physical presence test if you are

country. Whether a treaty prevents you from

the conference, you returned to Lisbon and con-

physically present in a foreign country or coun-

becoming a bona fide resident of a foreign coun-

tinued living there. On January 1, 2008, you

tries 330 full days during a period of 12 consecu-

try is determined under all provisions of the

completed an uninterrupted period of residence

tive months. The 330 days do not have to be

treaty, including specific provisions relating to

for a full tax year (2007), and you meet the bona

consecutive. Any U.S. citizen or resident alien

residence or privileges and immunities.

fide residence test.

can use the physical presence test to qualify for

the exclusions and the deduction.

Example 1. You are a U.S. citizen em-

Example 2. Assume the same facts as in

The physical presence test is based only on

ployed in the United Kingdom by a U.S. em-

Example 1, except that you transferred back to

how long you stay in a foreign country or coun-

ployer under contract with the U.S. Armed

the United States on December 13, 2007. You

tries. This test does not depend on the kind of

Forces. You are not subject to the North Atlantic

would not meet the bona fide residence test

residence you establish, your intentions about

Treaty Status of Forces Agreement. You may be

because your bona fide residence in the foreign

returning, or the nature and purpose of your stay

a bona fide resident of the United Kingdom.

country, although it lasted more than a year, did

abroad.

not include a full tax year. You may, however,

Example 2. You are a U.S. citizen in the

qualify for the foreign earned income exclusion

330 full days. Generally, to meet the physical

United Kingdom who qualifies as an “employee”

or the housing exclusion or deduction under the

presence test, you must be physically present in

of an armed service or as a member of a “civilian

physical presence test (discussed later).

a foreign country or countries for at least 330 full

component” under the North Atlantic Treaty Sta-

days during a 12-month period. You can count

tus of Forces Agreement. You are not a bona

days you spent abroad for any reason. You do

Bona fide resident for part of a year. Once

fide resident of the United Kingdom.

not have to be in a foreign country only for

you have established bona fide residence in a

employment purposes. You can be on vacation.

foreign country for an uninterrupted period that

Example 3. You are a U.S. citizen em-

You do not meet the physical presence test if

includes an entire tax year, you are a bona fide

ployed in Japan by a U.S. employer under con-

illness, family problems, a vacation, or your em-

resident of that country for the period starting

tract with the U.S. Armed Forces. You are

ployer’s orders cause you to be present for less

with the date you actually began the residence

subject to the agreement of the Treaty of Mutual

than the required amount of time.

and ending with the date you abandon the for-

Cooperation and Security between the United

eign residence. Your period of bona fide resi-

Exception. You can be physically present

States and Japan. Being subject to the agree-

dence can include an entire tax year plus parts

in a foreign country or countries for less than 330

ment does not make you a bona fide resident of

of 2 other tax years.

full days and still meet the physical presence

Japan.

test if you are required to leave a country be-

Example. You were a bona fide resident of

Example 4. You are a U.S. citizen em-

cause of war or civil unrest. See Waiver of Time

Singapore from March 1, 2006, through Sep-

Requirements, later.

ployed as an “official” by the United Nations in

tember 14, 2008. On September 15, 2008, you

Switzerland. You are exempt from Swiss taxa-

returned to the United States. Since you were a

Full day. A full day is a period of 24 consecu-

tion on the salary or wages paid to you by the

bona fide resident of a foreign country for all of

tive hours, beginning at midnight.

United Nations. This does not prevent you from

2007, you were also a bona fide resident of a

being a bona fide resident of Switzerland.

foreign country from March 1, 2006, through the

Travel.

When you leave the United States to

Effect of voting by absentee ballot. If you

end of 2006 and from January 1, 2008 through

go directly to a foreign country or when you

are a U.S. citizen living abroad, you can vote by

September 14, 2008.

return directly to the United States from a foreign

Chapter 4 Foreign Earned Income and Housing: Exclusion – Deduction

Page 14

Irs Publication 54 - Tax Guide For U.s. Citizens And Resident Aliens Abroad - 2008 Page 14

Related Articles

Related forms

Related Categories