US Physical Presence test must be timed with non-US work?

kev · Post by **kev** » Mon Jan 31, 2011 12:18 pm

I am a US citizen. I was a resident of a non-US, non-Canada country during Jan-Aug 2010 and moved to Canada in August 2010.

During Jan-Aug 2010, I received US employment income from a US company where I worked remotely from the third country.

During Sept-Dec 2010, I received Canada employment income while living in Canada. It was an intra-company transfer to the Canada office.

On my US tax return, I would like to file for the foreign income exclusion for the income received from Canada during the Sept-Dec 2010 period.

Which of the following ways is the best way to make the exclusion of the Canada income on my 2010 US tax return?

1) I can file for an extension for my US taxes so that by August 2011, I meet the 330 day requirement for the Physical Presence test.

2) I've calculated that I can already claim accurately that from June 2009 until June 2010, I met the 330 day requirement for the Physical Presence test. However, as stated above, this period does not correspond to the Sept-Dec 2010 period when I received the foreign income I wish to exclude. (Hence the title of this post.) Does this matter?

3) I can try to meet the requirements of the Bonafide Residence test, but the conditions are thus: I was a bonafide resident of the non-US, non-Canada country Jan-Aug 2010 while receiving income in the US, and I was (am) a resident of Canada Sept-Dec 2010 while receiving income in Canada. Would I meet the 12 month residency requirement for the Bonafide Residence test for the Sept-Dec 2010 period?

Thank you!
Kevin

nelsona · Post by **nelsona** » Mon Jan 31, 2011 5:12 pm

You should be claiming the exclusion on ALL your foreign wages, including that from the first part of year.

nelsona · Post by **nelsona** » Mon Jan 31, 2011 5:13 pm

You are a US citizen, thus it is not required that you meet bona fide test.

kev · Post by **kev** » Mon Jan 31, 2011 5:50 pm

Hi Nelsona, thanks for your replies. Not sure if my post was clear enough.

The Jan-Aug 2010 income was US income, so not excludable from my US tax return, right?

What I want to do is exclude my Canada income Sept-Dec 2010 when I file my US tax return.

As a US citizen, I have to qualify for the foreign earned income exclusion by Bonafide Residence test or Physical Presence test, right?

I see three possible ways to do this in my case, none ideal, and wondered which is the recommended way (see original post).

Thanks very much!
Kevin

nelsona · Post by **nelsona** » Mon Jan 31, 2011 5:56 pm

No, your wages while out of US are considered foreign wages.

You are overthinking this.