Deductions & credits

The "Physical Presence Test" rules actually allow you to overlap the 12-month periods in consecutive calendar years (as the IRS tells us in Publication 54). And although you’re allowed to choose any 12-month period, it’s best to include as many days in the current tax year as possible, as Form 2555 adjusts your exclusion(s) according to the percentage of the total days in the year that you were out of the U.S. So 1/1/2022 to 12/31/2022 would be best for you this year (your current 2022 return), and it’s definitely allowed!

Those same rules make next year’s return a little complicated, but in a good way(!). Since your 12-month period doesn’t have to end on the date you leave, you’ll be able to move the period back, to include more days of 2023. I’m thinking 9/4/2022 to 9/3/2023 gives you the best outcome (assuming you actually leave on July 31, so you’re not there midnight to midnight that day). Of course, if your departure date changes, you’ll want to do some math or contact us if things aren’t completely clear…

Also, assuming you filed the extension last year to get your Physical Presence Test met first (which many people do), that would not be needed this time around, as you’ve already met the test for your 2022 return with the minimum 330 days out of the calendar year itself.  (Of course, that doesn’t mean you can’t still file one for any other reason, including just your personal preference on the timing.) I hope this is all clear, but don’t hesitate to confer with us some more if needed, jkobM97!