Filing the 2555 for the second year!!??

[provec 5]

What do you guys think about my wife using the 2555 to exclude her foreign income in 2016 after having lived in the USA for several months in that same year and about 4 months in the prior year?

 

She filed it (the 2555) successfully for the 2015 tax year (her first year with her IR1 Visa) because she had been in Colombia for many years prior, but in this past tax year she  was finalizing her retirement in Colombia and only spent the first 7 months there before coming to the US permanently in August of 2016.

 

Would she still qualify to have 7 months of Colombian teacher's salary excluded if she had already been to the US for 4 months in 2015 (May through September before she returned to finish her teaching obligations). ?

 

Tx!

[Wuozopo 4,293]

The IRS states the qualifications--

 

To claim the foreign earned income exclusion, the foreign housing exclusion, or the foreign housing deduction, you must have foreign earned income, your tax home must be in a foreign country, and you must be one of the following:

• A U.S. citizen who is a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year,
• A U.S. resident alien who is a citizen or national of a country with which the United States has an income tax treaty in effect and who is a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year, or
• A U.S. citizen or a U.S. resident alien who is physically present in a foreign country or countries for at least 330 full days during any period of 12 consecutive months.

The first two are out because she's not a US citizen (1) and there is no tax treaty with Colombia (2).

 

The third requires picking a twelve month period and seeing if she has 330 days in Colombia.

 

So for example Sept 1, 2015 to August 31, 2016 is 366 days because of leap year. Can you come up with 330 days during that 12 month period that she was in Colombia. Or looking at it the other way

366-330=36.  She could only be away from Colombia 36 days between Sept 1and Aug 31.

[provec 5]

Thanks,

It would have to be an earlier period in time in her case.

Last year I used the several continuous years that she was in Colombia PRIOR to coming here for the first time in May, 2015 because she had been in her country non-stop since 2009.

 

i'll have to claim my 330 days from that time block because since May of 2015 she was in/out of the US three or four times, enough that we can't piece together 330 days.

I didn't see in the rules that you can't use the same time period more than once, do you have any info on that part?

 

Rob

 

 

[Wuozopo 4,293]

Well your 12 months have to be continuous, so you can't pick three here and two there and some more in another place. And your end month needs to be in 2016 because that's the year with income you want to exclude. Look at the foreign tax credit as another option so you don't get taxed twice on the same earnings.