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Showing posts with label physical presence test. Show all posts
Showing posts with label physical presence test. Show all posts

January 18, 2017

Situations Where Foreign you Income Expat Exclusion Will NOT WORK!

If you think on form 2555 you eligible for the foreign earned income exclusion under the physical presence test, don't be so certain. Read the following link to find out how the IRS can take it away from you on a technicality. If you need help succeeding and preparing a return that will survive audit and IRS scrutiny email us. ddnelson@gmail.com

http://www.lexology.com/library/detail.aspx?g=c4304733-ff7b-4488-94a4-64261807afa5

January 30, 2014

Qualifying for the Foreign Earned Income Exclusion Physical Presence - When You Have Foreign Residence or Tax Domicile

The IRS can cause you problems if you claim a foreign residence for the Physical Present Test when attempting to use the  foreign earned income exclusion on your tax return. Factors that are looked at to determine if you have a foreign residence are:

In Sochurek v. CIR, the Court of Appeals for the Seventh Circuit listed some of the factors to be weighed in determining a taxpayer's residence:
a. The taxpayer's intention.
b. Establishment of a home temporarily in the foreign country for an indefinite period.
c. Participation in the activities of the community on social and cultural levels, identification with the daily lives of the people, and, in general, assimilation into the foreign environment.
d. Physical presence in the foreign country consistent with the taxpayer's employment.
e. The nature, extent, and reasons for temporary absences from the foreign home.
f. Assumption of economic burdens and payment of taxes to the foreign country.
g. Status of a resident of the foreign country as contrasted to that of a transient or sojourner.
h. The taxpayer's employer's classification of the taxpayer's income tax status.
i. Marital status and residence of the taxpayer's family.
j. Nature and duration of his employment; whether his assignment abroad could be promptly accomplished within a definite or specified time.
k. Whether the taxpayer's purpose in establishing a foreign home is tax evasion.

Want help with your tax return or have expat or international tax questions. Email us at ddnelson@gmail.com.  We have been doing expat taxes for over 30 years.

March 3, 2013

Everything You Wanted to Know about the Foreign Earned Income Exclusion (IRS Form 2555)

One of the best tax benefits in the tax code is the foreign earned income exclusion.  If you live abroad in a no tax or low tax jurisdiction it allows you to save many thousands of dollars in US income taxes.


If you meet certain requirements, you may qualify for the foreign earned income and foreign housing exclusions and the foreign housing deduction.

If you are a U.S. citizen or a resident alien of the United States and you live abroad, you are taxed on your worldwide income. However, you may qualify to exclude from income up to an amount of your foreign earnings that is now adjusted for inflation ($91,400 for 2009, $91,500 for 2010, $92,900 for 2011, $95,100 for 2012). In addition, you can exclude or deduct certain foreign housing amounts.
You may also be entitled to exclude from income the value of meals and lodging provided to you by your employer. Refer to Exclusion of Meals and Lodging in Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad, and Publication 15-B, Employer's Tax Guide to Fringe Benefits for more information.

If you live in a foreign country where you must pay foreign income taxes, you can avoid double taxation by taking foreign tax credits which offset your US tax on that foreign income dollar for dollar.  We have over 30 years experience in assisting US expatriates, green card holders and nonresidents pay the lowest US income taxes possible. We can often help you avoid having to pay US state taxes also.  Email us at ddnelson@gmail.com or visit our websites at www.TaxMeLess.com or www.expatattorneycpa.com