How to qualify for the Physical Presence Test to use Foreign Earned Income Exclusion

Jul 23, 2018

U.S. expats can use the Foreign Earned Income Exclusion to reduce taxable income. And if you did you research on this topic, then you probably heard about tests to pass. American abroad has to qualify for one of the two tests. Today we explain what you need to pass the Physical Presence Test.

Let’s take another look at a few general requirements to use FEIE:

  • You should have foreign earned income
  • Your tax home must be in a foreign country
  • and one must qualify for one of the two tests, either Bona Fide Residence or the Physical Presence Test.

The IRS states that a U.S. citizen or a U.S. resident alien who is physically present in a foreign country or countries for at least 330 full days during any period of 12 consecutive months qualifies for the Physical Presence Test, but is it really that simple?

And here why we prepared infographics on the details of Physical Presence Test. Check it out below:

Most of the Americans abroad prefer to use Foreign Earned Income to save money on the tax bill. However, if you ask a tax professional, they will always recommend using the Foreign Tax Credit instead. It has some massive advantages that U.S. expat should be aware of before making a decision to choose one of the options. Would you like our help? Contact us now and we will respond to you within 24 hours.

Limited time deal: We offer 20 min free call, which has already helped dozens of U.S. expats to get guidance and gain clarity. Book your time now and our tax professionals will call you!


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