I am a US cit and have lived overseas a couple of years. However, I spent about 3 months in the US in the early part of 2024 (still working for my foreign employer). I have been using the physical presence test in past years, to avoid any question about whether I"m a bone fide resident (likely am, but on a three year contract). I would satisfy the physical presence test for 2024, only if I identified my year as running from early May 2024 to early May 2025. May I use the automatic extension to delay filing so I can add those couple weeks to my time overseas? I just want to confirm that the 330 days for 2024 can continue past April 15, 2025.
@chrisgh are you still abroad ? If so then your filing date is June 16th. without any extension. Also the extension request goes to IRS -- nothing to do with TurboTax -- it acts as a transmitter in the case of an extension request ( automatic extension 4868 gives you till October 15th/16th.
Is there more I can do for you ?
Thank you. Yes, I am abroad so the June 16th deadline would apply. I’d like to confirm that it’s ok to count my 330 days from May 2024 until May 2025–I.e after April 15,2025 but before June 16,2025. (I have thought this was fine and then I saw another posting/answer that said the year had to end before the current tax year—that threw me off)!
Yes, your presence in the foreign country can be any 12 month period. However, you will still need to prorate your foreign earned income exclusion based on how many days you were present in 2024. So you'd qualify for the exclusion based on being present from May 2024 to April 2025, but your exclusion would be calculated based on May - December 2024.
I think I figured out the source of my conclusion. As noted above, to apply the Foreign Income Exclusion under the physical presence test for 2024, the 330 days can include days in 2025. However, when looking at the monetary thresholds that trigger reporting Foreign Financial Assets on Form 8938 -- to be considered living outside the US (and thus subject to much higher monetary reporting thresholds) you could either be a bona fide resident OR have lived overseas for 330 full days during any 12 consecutive months THAT END IN THE TAX YEAR BEING REPORTED. So it could be possible that in 2024 you meet the 330 day requirement for the Foreign Income Exclusion counting days in 2025, but you would be subject to a lower reporting threshold on your Foreign Financial assets because your 330 days didn't end in 2024. Is this correct? So slightly different applications of the 330 day rule for the different purposes. I didn't catch that difference at first.
@chrisgh , just to clear --
(a) for FEIE, the 12 month test period has to be a continuous and has to overlap the earnings period that you are trying exclude . Thus if your foreign earning period is June 2024 through Dec 2024 and you established a foreign tax home ( first full 24 hr. day abroad / in foreign country ) is say May 1st. 2024, then the earliest 12 month period is May1st , 2024 through May1st 2025 Now if you meet the physical presence test of 330 days abroad, you can exclude your earnings of June 2024 through December 2024 -- test period overlaps the earnings period.
(b) As long as you have a foreign tax home then the FATCA higher threshold applies. Thus the augmented threshold is valid as long as you have a foreign tax home on the last day of the year ( because it asks for the value at the end of the year plus a few ands/ifs/buts ).
Does this jibe with your analysis ? or thought process?
pk
ah...ok. I think I was not reading these as two separate tests. so in your example in a (income in 2024), you are saying in that the higher FATCA threshold would apply because you established your foreign tax home in May 2024? I'm not understanding why the instructions for the FATCA say that the 330 day period needs to end in the reported tax year.
@chrisgh now you got me --- I know of no requirement of 330 days for FATCA ( form 8938 ). Here is a comparison of FBAR and FATCA -- it just says " living outside the US" -- I am interpreting this to mean a tax home ( for surely the higher threshold will not apply if someone is vising his grandparents over the Christmas/ New Years holidays -- that would not be logical )
Comparison of Form 8938 and FBAR requirements | Internal Revenue Service.
Does this make sense ?
I was working of the IRS Instructions to Form 8938 https://www.irs.gov/instructions/i8938.
In the section on Types of Reporting Thresholds, it states:
Taxpayers living outside the United States.
If your tax home is in a foreign country, you meet one of the presence abroad tests described next, and no exception applies, file Form 8938 with your income tax return if you satisfy the reporting threshold discussed next that applies to you.
. . .
A U.S. citizen who has been a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year.
A U.S. citizen or resident who is present in a foreign country or countries at least 330 full days during any period of 12 consecutive months that ends in the tax year being reported.
It's that last part of the second bullet that has confused me.
@chrisgh you are correct -- actually was not aware of this implication -- but only for the first year.
You would be surprised at what the Foreign Financial Institution are required to report under FATCA -- both for the 50K and 200K value accounts. Thus the US person's filing of FATCA form ( 8938 ) is really a cross check ( but with teeth ). There being no definition of "living abroad" except for the nearest stand in / proxy being the test for Physical Presence or Bonafide Resident.
Sorry for my ignorance.