topic Foreign Income Exclusion for partial year in Deductions & credits

Foreign Income Exclusion for partial year

roadwarrior101 — Tue, 01 Feb 2022 01:31:28 GMT

I moved abroad for work in late October 2021 and am in the process of filing taxes. TurboTax is saying I don't qualify for either the Bona Fide Residence Test or Physical Residence Test given that I've been abroad for less than a year.

However, I've read elsewhere that I can pro-rate this for my partial year, given that I plan to be abroad for over a year (indefinite at this point). I've seen others say they've amended their 2021 returns once they hit that time frame. But, I want to avoid having to pay a lot out of pocket now for taxes, given that I will qualify once the time hits. Is there another way I can take advantage of the exclusion at this point, so I'll be able to file my taxes normally?

Re: Foreign Income Exclusion for partial year

LeonardS — Tue, 01 Feb 2022 02:19:20 GMT

If you need an extension to meet either the Physical Presence or the Bona Fide Residence Test to qualify for the Foreign Earned Income Exclusion you will file Form 2350. To qualify for an extension using Form 2350, all of the following must apply:

You are a U.S. citizen or resident alien.
You expect to meet either the Bona Fide Residence Test or the Physical Presence Test, but not until after your tax return is due.
Your tax home is in a foreign country (or countries) throughout your period of bona fide residence or physical presence, whichever applies.

An extension using Form 2350 is not automatic. The form includes a return label which the IRS will complete and return to you indicating whether your extension has been approved or denied. If approved, Form 2350 grants you an extension to 30 days after the date in which you expect to qualify for the Physical Presence Test or Bona Fide Residence Test.

Re: Foreign Income Exclusion for partial year

roadwarrior101 — Wed, 02 Feb 2022 20:11:21 GMT

Thanks for the inputs. Sounds like I would need to use a CPA rather than TurboTax for this? I'm also not sure how I'd be able to do this via mail, given that I'm currently living overseas.

Re: Foreign Income Exclusion for partial year

AmeliesUncle — Thu, 03 Feb 2022 05:55:57 GMT

If you will meet the 330 days by October 15th, you can just file a regular extension.

However, I suggest you prepare your tax return now to see if you owe any money, because that is due by April 15th. You may need to set up some 'mock' dates in the program to exclude the foreign income.

You DO need to enter the excluded income in order to figure out what you owe because even though the foreign income is "excluded", it still DOES affect how your US income is taxed (in most cases your US income will be put into higher tax brackets).

Re: Foreign Income Exclusion for partial year

thomasrg65yu — Sat, 12 Feb 2022 01:25:24 GMT

In a similar position. TurboTax does not support sending of Form 2350 through e-file

https://ttlc.intuit.com/community/taxes/discussion/can-i-fill-form-2350-out-from-turbo-tax/00/4561

and the IRS does not let you email the form to them (that would be too easy and sensible) so you are left with filling in the PDF form and physically mailing it to the IRS. You have to complete a Return Label with your address for them to confirm their decision (by mail).

Re: Foreign Income Exclusion for partial year

Anonymous — Sun, 20 Feb 2022 03:08:48 GMT

the IRS doesn't accept this form via e-file. It can only be filed by mail or it may be hand delivered to an IRS office.