Can I successfully claim a foreign tax home given the following context?

[alaro40]

Worked in Afghanistan on a 366-day project over last 12 months; had never lived outside the US previously; returned to the US every 4 months for total of 33 days out of 365 days (in foreign countries for 332 days); have a Texas driver's license; do not have permanent address in any country.

My concern after some superficial research is that the IRS exploits the lack of specificity of "abode" and will not afford me "itinerant" status. As such, despite my seemingly qualifying for physical presence test, I would have to pay taxes on my income. 

[SweetieJean]

Each visit every 4 months lasted for 33 days?

[SweetieJean]

Are you a US citizen? Registered to vote anywhere?

[alaro40]

The total days of the 4 visits summed to 33 days (12 days, 7 days, 7 days, 5 days). US Citizen, registered to vote in Texas

[SweetieJean]

Was this pay received as a military or civilian employee of the U.S. Government or any of its agencies?

[SweetieJean]

<a rel="nofollow" target="_blank" href="https://www.irs.gov/individuals/international-taxpayers/foreign-earned-income-exclusion-tax-home-in-...>

[pk · Accepted solution]

Alaro40,

i would not be surprised if you fall just short -- I say this because  IRS counts full days i.e. 24 hours starting at midnight and it is away from US shores and territories. So suggest you work out the exact days away by using the form 2555  to see if you actually were away from the USA for 330 days total in any 12 month period. That allows you to establish foreign  tax home.

Secondly,  you also have to establish the source of the income i.e. it must be foreign and not from US sources , including the DOD or State departments etc., arms of the US govt.

The fact that you are a citizen/ resident is proved by the fact that you are registered to vote  in Texas -- whether you owned a home is not that important for tax purposes.

Thirdly, even if you do not qualify for  exclusion of Foreign Earned Income, you still can avail yourself of foreign tax credit or deduction , if you have paid taxes to a foreign administration/ entity.  Your income has to be taxed somewhere -- FEI exclusion just avoids double taxation to an extent. Please provide more details

[alaro40]

My concern is not toward the Physical Presence Test. I knew about that ahead of time and 100% sure that I spent 332 days in a foreign country and that I earned income from a foreign subsidiary of a private US company. My issue is that I've read cases about the IRS being sticklers for US-based "abodes" because of things like driver's licenses and (now) voter registration.

[pk]

for foreign earned income exclusion, the only requirements are (a) foreign tax home and (b) foreign sorced earned income ---  whether  you had another home in the USA is not material. If you know something, please  could you provide some ref --- statutes do not require anything else ( as  far as I am aware).  Will be very interested

[SweetieJean]

<a rel="nofollow" target="_blank" href="https://www.irs.gov/individuals/international-taxpayers/foreign-earned-income-exclusion">https://www...>

[SweetieJean]

<a rel="nofollow" target="_blank" href="https://www.irs.gov/individuals/international-taxpayers/foreign-earned-income-exclusion-tax-home-in-...>

[alaro40]

SweetieJean,

The IRS "tax home" website is what sparked my fears. Along with this analysis <a rel="nofollow" target="_blank" href="http://www.tax-power.com/iraq_contractors.htm">http://www.tax-power.com/iraq_contractors.htm</a> although it might be thrown in as "the internet." Still, the IRS language is "You are not considered to have a tax home in a foreign country for any period in which your abode is in the United States....The location of your abode often will depend on where you maintain your economic, family, and personal ties."

[pk]

Abode, as used by the IRS, implies your home----- thus if you have a house in Texas, all your connections and family ties are in Texas and you go to Egypt for a year to take care of business -- your home/abode is still Texas. What they are trying to say is that you can have only one abode at a time-- determined by your closer connection to the place.  When you are abroad, even if your family stays back in the USA,  and you establish a "home/residence/ abode" where you plan to stay for an undetermined time because of your job, your new home is your abode while your family has a different abode ( because your wife, as head of household maintains a separate  abode).  That is why SJ is brining up the question of "being away only for a fixed period of time" i.e. you knew for certain that you were going to away for a known period of time, would not qualify for taxhome change.  Don't worry you are OK with foreign earned income exclusion

[SweetieJean]

If you go to a foreign country to work on a particular job for a specified period of time, you ordinarily will not be regarded as a bona fide resident of that country even though you work there for 1 tax year or longer. 

https://www.irs.gov/individuals/international-taxpayers/foreign-earned-income-exclusion-bona-fide-re...

The fact that you used the word Worked (past tense) indicates that this assignment is now over, and you are now living elsewhere.