Individual worked for a US company and lived abroad over 330 days in each of
2009 through 2011 and qualified for the foreign income exclusion (Form 2555) in each of those years. In 2012, he moved back to the US, but still traveled abroad on trips ranging from 3 to 10 days for a total of only 163 days out of the country.
It?s my understanding that the 330 day test does not need to be within the calendar year (e.g. Jan-Dec 2012), but can we use the 12 month period of, say, March 2011 through Feb 2012 to accumulate 330 days working abroad, even though the time spent abroad in 2011 was already used to qualify for the exclusion on the 2011 tax return?
(1) Qualified individual The term ?qualified individual? means an individual whose tax home is in a foreign country and who is? (A) a citizen of the United States and establishes to the satisfaction of the Secretary that he has been a bona fide resident of a foreign country or countries for an uninterrupted period which includes an entire taxable year, or (B) a citizen or resident of the United States and who, during any period of 12 consecutive months, is present in a foreign country or countries during at least
330 full days in such period.
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The above does not say that you cannot re-use a 330 day period, nor does it say anything about overlapping 330 day periods. But is his tax home in a foreign country?
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(3) Tax home The term ?tax home? means, with respect to any individual, such individual?s home for purposes of section 162 (a)(2) (relating to traveling expenses while away from home). An individual shall not be treated as having a tax home in a foreign country for any period for which his abode is within the United States.
2009 through 2011 and qualified for the foreign income exclusion (Form 2555) in each of those years. In 2012, he moved back to the US, but still traveled abroad on trips ranging from 3 to 10 days for a total of only 163 days out of the country.
calendar year (e.g. Jan-Dec 2012), but can we use the 12 month period of, say, March 2011 through Feb 2012 to accumulate 330 days working abroad, even though the time spent abroad in 2011 was already used to qualify for the exclusion on the 2011 tax return?
Before you even start counting days, the person has to be eligible to use the test. As soon as you said he moved back to the US, you told me he changed his tax home from abroad to the US. He fails the test for having a foreign tax home and is not eligible to exclude income. In addition, it is highly likely he no longer has a bona fide residence in a foreign country. He fails this test also.
As an aside... If he was an eligible individual, then the bona fide residence test of 330 days in a 12 month period does allow for overlapping 12 month periods. See IRS Pub 54 starting on page 14.
1) I work full-time in Bermuda. On the payroll, regular 9-5 job.
2) I travel to the USA every 3 weeks or so and stay usually for a long weekend. I will be present in the USA for more than 35 days in 2013.
3) In March I transferred the lease on my USA apartment (in North Carolina) from my name to my wife's.
4) My car remains registered in the USA. I did not change my bank accounts, but I opened one in Bermuda. Did not cancel my USA phones but got one in Bermuda. I've been renting a room in a private home in Bermuda, but will probably get my own apartment soon.
5) IRS form asks if I pay income tax to a foreign country - I do not, because Bermuda has no income tax.
6) No longer use my library card (does that matter), will not vote except in presidential elections, but have not affirmatively cancelled library card. Continue to see a doctor in North Carolina, because it's cheaper.
7) Began work January 1, 2013
Am I eligible for the Foreign Earned Income Exclusion (and by extension the Foreign Housing Deduction)? Would it matter if I had started work on January 7?
Am I subject to North Carolina state tax on my investment income? Presumably I would not be subject to it on my Bermuda income, since it was not earned in North Carolina.
2009 through 2011 and qualified for the foreign income exclusion (Form 2555) in each of those years. In 2012, he moved back to the US, but still traveled abroad on trips ranging from 3 to 10 days for a total of only 163 days out of the country.
calendar year (e.g. Jan-Dec 2012), but can we use the 12 month period of, say, March 2011 through Feb 2012 to accumulate 330 days working abroad, even though the time spent abroad in 2011 was already used to qualify for the exclusion on the 2011 tax return?
I should have said Physical Presence Test (PPT).... not Bona Fide Resident test. The overlapping 330 days relates to the PPT. So... tax home still has to be in a foreign country to be eligible. A Bona Fide residence is not required for the PPT. You can use overlapping 330 day periods to determine the overall continuous period.
weekend. I will be present in the USA for more than 35 days in 2013.
from my name to my wife's.
but I opened one in Bermuda. Did not cancel my USA phones but got one in Bermuda. I've been renting a room in a private home in Bermuda, but will probably get my own apartment soon.
Bermuda has no income tax.
presidential elections, but have not affirmatively cancelled library card. Continue to see a doctor in North Carolina, because it's cheaper.
Foreign Housing Deduction)? Would it matter if I had started work on January 7?
I would not be subject to it on my Bermuda income, since it was not earned in North Carolina.
First you need to determine if Bermuda is your tax home. To be your tax home, you have to be there either under a permanent or indefinite period AND you can not have an abode in the U.S. Let's assume you meet the first part. I don't know! It seems to me you fail the second part. Merely assigning the lease to your spouse does not mean you have given up that home. It is available to you. You would be better off renting it out so it was not available to you. You also seem to have an abode in the US because you said you regularly return to it every 3 weeks or so. If you return to some other place (not the home your spouse lives in as that would probably be considered your abode) then you would apparently not have an abode in the US.
Let's just assume you could prove that Bermuda was your tax home. You fail the Physical Presence test (not enough foreign days). That leaves the Bona Fide Residence (BRT) test. Getting your own apartment and signing a lease (not month to month) would show that you have a bona fide residence in Bermuda. I think your temporary weekend trips to the US every three weeks would be acceptable because your intent is to return to your bona fide residence (which you do).
I am not familiar with NC rules and when and how you give up your domicile and cease being a resident. You can have your tax home in Bermuda and still be a resident of NC. Assuming that NC rules are similar to other states, it appears that NC is still your domicile because of the ties you still have to it. I don't think assigning the lease to your wife would convince NC that you gave up your NC home. Nor would keeping your bank account and car and regular visits.
By the way, you never did tell us where your wife lives and where in the US you return to.
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