Foreign Earned Income while being a permanent resident in the US in 2024

[sakilee0209]

Background:

I am a Japanese citizen and currently have a permanent residence card in the US. I left the US on 8/25/2024 and arrived in Japan on 8/26/2024 with my daughter who is a US citizen. My spouse is a US citizen and remains in the US throughout 2024. I started working for a local Japanese company on 10/16/2024. 

I don’t meet the physical presence test nor tax home test so I am considering filing Form 2350 (extension) in order to meet the physical presence test for the period July 26, 2024 – August 27, 2025 to get the Foreign Earned Income Exclusion.

Questions:

1. I am currently a permanent resident as of now /3/9/2025 but I might let go of my permanent residency and permanently live in Japan (not going back to the States) in 2025. If so, when I meet the physical presence test, I may no longer be a permanent resident later in 2025. Even that's the case, can I still file Form 2350 since I was a permanent resident at the end of 2024 (12/31/2024) or do I have to be permanent resident during all the physical presence test period?
2. If I am meeting the physical presence test before October 15, should I just file Form 4868 (regular extension) rather than Form 2350?
3. We want to file married filling jointly. Can I still file Form 2350 (or Form 4868) even if only my daughter and I live abroad and not my spouse?

[pk]

@sakilee0209 , while I digest your situation ( as described in your post ), can you tell me  when were you admitted with the GreenCard ?  Generally this is shown on the form as  "admitted ..... date and place  ".   I ask because  depending on how long you have been in the USA, there may be other things you have to do  as part of abandoning your immigrant status.   

I will circle back once I hear from you --yes ?

pk

[sakilee0209]

Thank you for your reply. I have held my green card since 2016. 

[pk]

@sakilee0209 , thank you for the response.

Given the uncertainty of your future decisions, I would :

(a) File for an extension  on form 2350  and then file your return post  8/26/2025.

(b) The above will allow you to choose a test period of  8/26/2024  to 8/26/2025 for purposes of form 2555.  Assuming that you meet the 330 days away from the US, you should be able to  exclude   Foreign Earned Income for the tax year 2024.

(c)  Note since you are filing MFJ,  your 2024 filing would include  all of your and your wife's world income for US tax purposes, with your Foreign income  only excluded.  Also  your marginal tax rate would be pushed up  ( it is based on total income without regard to excluded income ).

(d) The extension only allows for a later filing  but the pay-by date of 4/15/2025 remain in place.

(e)  Also note that because  you have been a resident of the USA for a long time, there are tax consequences when you abandon the GC.  Depending on the exact facts and circumstances, there may  mark-to-market  requirements on assets that own in the US.  Here is some info on this :

Expatriation tax | Internal Revenue Service

Is there more I can do for you ?

pk

[sakilee0209]

Thank you so much for your response. 

I would like to confirm if I can just file Form 4868 rather than Form 2350 since I just need extension of time to file till August. Form 4868 will give me extension till October 15, 2025 which is enough time for me to meet the physical presence test. Also I can file Form 4868 online but not Form 2350 (paper file only). 

I truly appreciate your help in advance. 

[SusanY1]

Yes, if you don't need time beyond October 15, 2025 to meet the physical presence test then you can file Form 4868 for your extension.