For the FEIE, how to enter 2 different physical presence 12 month periods in the same year in turbotax?

[daled1]

First of all, in a separate question it was resolved that you can use 2 separate physical presence tests in 1 calendar year.  For example , for the year 2021 I can use the following 2 time periods.   

1.  From June 1 2020 - june 1 2021.  

2.  And Sept 1 2021 - Sept 1 2022.

But I don't see how to enter it in turbotax?  There doesn't seem to be a way to enter more than one set of dates?

[pk]

@daled1  is this an academic question or you really have this situation.  Please can you provide  the actual dates  of your foreign presence, the countries involved and your own immigration status ( US citizen / GreenCard/ ?? ).  Waht tax year are you trying to file?  Is this your first year ( 2021) for FEI exclusion ?

I will circle back after I have your answers

pk

[daled1]

I really have this situation.  I am an American citizen.  I have been using the feie for 10 years, all physical presence test.  But in 2021 because of covid I spent 4 months in the usa.  Those are basically the correct dates too.

From what I understand, the IRS does allow using 2 different physical presence tests in a given year.

So my question is just how to enter it into turbotax, it doesn't seem possible.

[pk]

@daled1 , you are correct.  However, those four months that you were Stateside, were you paid a salary by your foreign employer  ( in you r foreign tax home ) OR were you paid  ( and worked  remotely or otherwise ) in the USA ?
  Please answer --- I will  again circle back.

pk

[daled1]

Ah, I am self employed, so when I am stateside, I am earning income in the USA and not able to use the FEIE.

[daled1]

So I never got an answer to this, but I just read something online that would imply doing this in turbotax is not possible.

In order to do this, one has to file 2 2555 forms, and that can not be done electronically at the moment.

But I am not 100% sure about this.

[pk]

@daled1 , I apologize for being so late in responding to your question. Indeed, I see nothing anywhere in the IRS rules / regs/statutes  that limits 2555 to one  TIN ( SSN  ) per tax year.  But the need for one test period  kind of makes it so.  

I think the easiest way to do this would be  to ( if the aim is to just be able to exclude  the legitimate amount of FEI ), choose on test period that ends in the tax year  and declare the total foreign earnings  for that 2555  and the recognize the US income  ( i.e. earnings for the work done while in the USA ) -- that way TurboTax has no issue, you have excluded what is legitimately excludable and IRS has collected on the US income due to them -- yes this would mean you have gone round the bend a little and if challenged, you can explain the logic by which you arrived at this .  The other way would be play with absent from foreign tax home due to medical emergency ( COVID )  but I  have not looked into this .   I personally prefer the method I outlined above because it satisfies  all the needs.

I wish I could have cleaner solution.

pk

[daled1]

So I have confirmed with turbotax a couple things.

Yes, one can use 2 different physical presence tests in the same year.  You just have to file 2 form 2555s.

And turbotax cannot currently handle that.  It requires mailing in your form.

So I guess I could do your suggestion since it ends up with me paying the same amount, but I'm pretty sure its against IRS regulations, not sure what to do here.

[pk]

@daled1 , absent a way to file two 2555 in TurboTax,  there should be nothing illegal as long as you recognized all your foreign and domestic earnings for the tax year , even though some of your earnings fall outside the test period. It is your choice  but I feel pretty comfortable in withstanding a challenge wherein I have indeed paid my proper dues to the IRS ( perhaps with a little finesse).  The professional software that I used during earlier years, indeed allowed me to add forms as required and still e-file --- I just don't remember a similar case  having to use two 2555. 

You have to feel comfortable with your  choice because at the end of the day it is between you and the IRS ( especially when challenged).

Good Luck

Is there more I can do for you ?

pk

[daled1]

No, thats it, thanks for your help!

[daled1]

Hi Pk,

I had a thought on how to still use turbotax here, and was wondering your thoughts.

What if I filled out turbotax forms online and used 1 physical presence period that would give me the correct amount of taxes due, like you suggested above.  Then printed it out, and manually added 2 form 2555s with the correct time periods.  Then mailed it in.  

Do you see any reason why that would not work?

Thanks!

[pk]

@daled1  should work  ---

(a) as long as the two hand prepared 2555 together cover the  correct total  amounts of income ( to be excluded)

(b) will delay the processing  because of "mailed-in" return

thank you for trying to make it work

pk

[daled1]

Thanks PK for your advice!

I have a follow up question, now that I am thinking about my state taxes, not sure if this topic is veering too far off of the original.

1.My state honors the FEIE.

2. I will have spent 4 months in my state, but only 50 days will not be covered by the FEIE's 2 physical presence tests.

3.  So lets say I earned $150k for the year in total.  And the tax software says about 80k of it is deducted for the FEIE.

4.  Assuming I earned evenly throughout the year, lets say $12500 per month, then I earned 50,000 while I was in the USA for those 4 months.

5.  So is my state tax income 50000? Or is it based on the 50 days that my FEIE gives me?  50 days would be about 22,000.

This is getting complicated I know!