The IRS considers a full day a period of 24 consecutive hours, beginning at midnight. Therefore only full days in the foreign country count towards your physical presence test.
You are correct a day when you are traveling is not counted as a day towards meeting the physical presence test. What you call a day that does not qualify is irrelevant. Therefore, you can consider it a day worked in the U.S. for your record-keeping if you so desire.
If you have any other questions post them to this reply.
"FEIC" was a typo.
By FEIE do you mean Foreign Earned Income Exclusion and the physical presence test to qualify for the FEIE and or housing exclusion/deduction.
What question do you have about the physical presence test?
Yes, I am referring to the Foreign Earned Income Exclusion, and its Physical Presence Test.
Question 1: If I departed the US for a foreign country on a workday, does that count as a day worked in the US? I have been taking the conservative route whenever there is a gray area, so in my preparation I have counted this as a day worked in the US. But I don’t want to leave money on the table if it really isn't a day worked in the US.
For instance, the IRS website only says that a day departed from the US to a foreign country would not count as a full day abroad, in reference to the 330 day test. It doesn’t say whether it also wouldn’t count as a full day worked in the US if its on a work day during the tax year. I would assume its over international waters and couldn’t be counted for either a day worked in the US or a day abroad.
I also have other questions, but I cant think of the specific ones at the moment.
The IRS considers a full day a period of 24 consecutive hours, beginning at midnight. Therefore only full days in the foreign country count towards your physical presence test.
You are correct a day when you are traveling is not counted as a day towards meeting the physical presence test. What you call a day that does not qualify is irrelevant. Therefore, you can consider it a day worked in the U.S. for your record-keeping if you so desire.
If you have any other questions post them to this reply.
"FEIC" was a typo.
Thank you for your reply.
Question 1 Continued: But it is relevant, because on form 2555 row 18e, the taxpayer is asked to enter the “days on business in the US.” This is in the section where the taxpayer lists all international travel between his or her new home country and the US. This number is used to calculate the income earned in the US on business, and will be excluded from the foreign earned income exclusion.
If the departure day counts as a day on business—this is unrelated to the 330 days for the physical presence test—it will count towards the amount I must exclude from my foreign earned income. Thus, to maximize my allowable return: is the workday departure from the US to a foreign country within the tax year considered by the IRS a day on business in the US?
Question 2: If a salaried employee is allowed paid vacation as part of his or her employment agreement, this is still considered earned income, right? Row 18f asks to provide the calculation of income earned in the US on business. Which the IRS has shown an example where it was calculated as:
# of days in US on business/total days worked during the year * total income
In the IRS example of the mining engineer in country A, they chose to include that he had vacation and that it was subtracted from the 260 days in the year, to arrive at 240 for the denominator. My question is, this only would apply to it if the vacation was not earning money, I.E. a non paid vacation, right? If a employee of a company has a paid vacation, it is still earned money?