The Physical Presence Test for US Expats

What is the Physical Presence Test?

The physical presence test is a method the IRS uses to determine if a US taxpayer living abroad qualifies for the Foreign Earned Income Exclusion (FEIE). This exclusion allows US expats to reduce or even eliminate their US tax liability by excluding up to $126,500 of foreign earned income.

How to Qualify

To qualify for the physical presence test, US citizens, resident aliens, or Green Card holders must spend at least 330 days living in a foreign country over a 12-month period. The test does not require US expats to establish a residence abroad, as it does not consider the purpose of your time abroad.

It’s important to note that the 12-month period can start on any day of any month as long as it ends precisely 12 months later, the day before the same calendar date. This period can start or end in the applicable tax year.

Physical Presence Test Examples

Example 1: James, the Digital Nomad
James, is a US citizen who works remotely in Colombia as a freelancer. He travels across South America and lives in different countries. From June 1, 2024, to May 31, 2025, he spends 330 full days outside the US. He tracks his time abroad in a detailed spreadsheet, including flight itineraries. Since he meets the 330-day requirement within a 12-month period, James qualifies for the Foreign Earned Income Exclusion, reducing his US tax liability on his foreign-earned income.

Example 2: Sarah, the Teacher in Japan
Sarah is a US teacher who accepted a job at an international school in Japan. She moved to Japan on August 15, 2023, and lived there for a year. From August 15, 2023, to August 14, 2024, she spent 330 days outside the US. She occasionally traveled but stayed outside the US for the required number of days. As a result of careful planning, Sarah qualifies for the physical presence test and can claim the FEIE on her 2024 tax return.

FAQ on the Physical Presence Test

Do partial days count towards the 330 Days?
Only full days spent outside of the US count towards the 330-day requirement. A full day is considered a 24-hour period. For example, spending a half day (12 hours) in the US would not count as a full day of physical presence outside the country.

Can I qualify for the Physical Presence Test with a 12-month period that doesn’t align with the calendar year?
Yes! As stated above, the 12-month period can be any consecutive 12 months unrelated to the calendar year, understood as January-December. US expats can choose the 12-month period best for their situation.

What if I’m in transit on my travel days?
Travel days generally count as days outside the US if you spend them traveling internationally and not physically in the US.

Can I spend time in the US and still qualify for the Physical Presence Test?
Yes! As long as the total time does not exceed 35 days (or 36 for a leap year) within the 12 months. More than 35 days will disqualify you from the physical presence test.

What counts as a “full day” outside the US?
A full day is defined as a 24-hour period. For example, if you leave the US at 10:00 AM on Monday and return at 6:00 PM on Tuesday, you would count the departure and return days as partial days.

Can I claim the Foreign Earned Income Exclusion if I don’t meet the Physical Presence Test?
If a US expat spends less than 330 days abroad, they may still qualify for the Foreign Earned Income Exclusion using the Bona Fide Residence Test.

The Bona Fide Residence Test is another way the IRS can determine whether an American taxpayer is a resident of a foreign country.

How do I track my 330 days to ensure I qualify?
As always, accurate and detailed records are vital regarding taxes. MyExpatTaxes suggests using a spreadsheet or a travel diary. This makes it easier to track flight itineraries, passport stamps, or other documentation to prove any travel throughout the year.

Notable Exceptions

• If a US expat’s presence in a foreign country violates US law, the IRS will not view them as physically present in the foreign country for the time they violated the law. That also means that any income earned during that period is not considered foreign earned.
  • For example, if a US expat overstays their visa in a foreign country and continues to work without legal authorization.
    
• The minimum time requirement may be waived if the US taxpayer is forced to leave a foreign country. This can happen due to circumstances like war, civil unrest, or other conditions that make the country uninhabitable. If the taxpayer can prove they would have otherwise met the physical presence test requirements, they may still be eligible for the FEIE. Additionally, they may still qualify if they had a tax home in the country and were a bona fide resident.
  
• Any income earned from military or civilian service while stationed abroad is not considered foreign earned income.

MyExpatTaxes simplifies determining whether you qualify for the Physical Presence Test or the Bona Fide Residence Test. Our software will walk you through a series of questions to help identify which test applies to your specific situation and ensure you meet the requirements for the FEIE. Start today!

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