I posted a question on tax determination software earlier precisely because I wanted it to hold my hand on questions like these.
For 2007, I lived exactly the first 6 months of the year in a foreign country. My home was there. My family was there. I had a job as proteomics supervisor there for the past 3 years (yes, from mid-2004 to mid-2007). My salary was paid by the foreign university, and I paid taxes (income and others) to the foreign country.
So in mid-2007 I am back in the U.S., getting a job here and working for the last half-year here. Although my wife and daughter remain back in my wife's native country, I am here for good.
So here's what I think: my tax home was there for the first half of 2007 but back in the U.S. for the last half of 2007.
I should not have to pay U.S. income tax on income earned and taxed by a foreign employer and foreign country. It should be excluded from my income tax computation. But I should pay tax on U.S. income I earned in my new tax home in the U.S.
But Form 2555 is NOT AT ALL clear in its instructions OR its examples. I called the IRS and its expert said I met the physical presence test, but I am still not clear about the tax home!
Anyone else want to offer an opinion? The tax software seems to offer no opinion. And 1-800-829-1040 answered questions in a way that only generated more questions.