Can I successfully claim a foreign tax home given the following context?

Forum|Forum|7 years ago
June 1, 2019
7 replies
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Worked in Afghanistan on a 366-day project over last 12 months; had never lived outside the US previously; returned to the US every 4 months for total of 33 days out of 365 days (in foreign countries for 332 days); have a Texas driver's license; do not have permanent address in any country.

My concern after some superficial research is that the IRS exploits the lack of specificity of "abode" and will not afford me "itinerant" status. As such, despite my seemingly qualifying for physical presence test, I would have to pay taxes on my income.

Best answer by pk12_2

Alaro40,

i would not be surprised if you fall just short -- I say this because IRS counts full days i.e. 24 hours starting at midnight and it is away from US shores and territories. So suggest you work out the exact days away by using the form 2555 to see if you actually were away from the USA for 330 days total in any 12 month period. That allows you to establish foreign tax home.

Secondly, you also have to establish the source of the income i.e. it must be foreign and not from US sources , including the DOD or State departments etc., arms of the US govt.

The fact that you are a citizen/ resident is proved by the fact that you are registered to vote in Texas -- whether you owned a home is not that important for tax purposes.

Thirdly, even if you do not qualify for exclusion of Foreign Earned Income, you still can avail yourself of foreign tax credit or deduction , if you have paid taxes to a foreign administration/ entity. Your income has to be taxed somewhere -- FEI exclusion just avoids double taxation to an extent. Please provide more details

S

SweetieJean

Employee

Each visit every 4 months lasted for 33 days?

S

SweetieJean

Employee

Are you a US citizen? Registered to vote anywhere?

A

alaro40Author

Employee

The total days of the 4 visits summed to 33 days (12 days, 7 days, 7 days, 5 days). US Citizen, registered to vote in Texas

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SweetieJean

Employee

Was this pay received as a military or civilian employee of the U.S. Government or any of its agencies?

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SweetieJean

Employee

<a rel="nofollow" target="_blank" href="https://www.irs.gov/individuals/international-taxpayers/foreign-earned-income-exclusion-tax-home-in-foreign-country?_ga=1.106865155.1822665324.1473711499">https://www.irs.gov/individuals/international-taxpayers/foreign-earned-income-exclusion-tax-home-in-foreign-country?_ga=1.106865155.1822665324.1473711499</a>

P

pk12_2Answer

Employee

Alaro40,

i would not be surprised if you fall just short -- I say this because IRS counts full days i.e. 24 hours starting at midnight and it is away from US shores and territories. So suggest you work out the exact days away by using the form 2555 to see if you actually were away from the USA for 330 days total in any 12 month period. That allows you to establish foreign tax home.

Secondly, you also have to establish the source of the income i.e. it must be foreign and not from US sources , including the DOD or State departments etc., arms of the US govt.

The fact that you are a citizen/ resident is proved by the fact that you are registered to vote in Texas -- whether you owned a home is not that important for tax purposes.

Thirdly, even if you do not qualify for exclusion of Foreign Earned Income, you still can avail yourself of foreign tax credit or deduction , if you have paid taxes to a foreign administration/ entity. Your income has to be taxed somewhere -- FEI exclusion just avoids double taxation to an extent. Please provide more details

A

alaro40Author

Employee

My concern is not toward the Physical Presence Test. I knew about that ahead of time and 100% sure that I spent 332 days in a foreign country and that I earned income from a foreign subsidiary of a private US company. My issue is that I've read cases about the IRS being sticklers for US-based "abodes" because of things like driver's licenses and (now) voter registration.

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SweetieJean

Employee

If you go to a foreign country to work on a particular job for a specified period of time, you ordinarily will not be regarded as a bona fide resident of that country even though you work there for 1 tax year or longer.

https://www.irs.gov/individuals/international-taxpayers/foreign-earned-income-exclusion-bona-fide-re...

The fact that you used the word Worked (past tense) indicates that this assignment is now over, and you are now living elsewhere.