US Tax Question: Getting that 330 days via extensions

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zzm9980
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US Tax Question: Getting that 330 days via extensions

Post by zzm9980 » Thu, 16 Feb 2012 3:36 pm

Hello,

Simple quesiton. PWC told me since I had only been in Singapore for 6 months, I could file extensions until I've been here 330 days then get that earned income exclusion. That sounded fishy. But now, TurboTax is telling me the same thing. Obviously I'm overjoyed at this, as it is the difference between a $10k refund and owing quite a few $k.

Is it really this simple? Or is something going to bite me in the ass later?
If you haven't been present in a foreign country for 330 full days yet, but plan to be, then you have two options. You may wait to file your return (using an extension, if necessary) until you have been present in a foreign country for 330 days. Then you can file your return and claim the exclusion. Or you can file your return now, claiming only the Foreign Tax Credit (if eligible) which is covered in the Deductions and Credits section. Later you can file an amended tax return to claim the exclusion after you have met the 330 day test.

scarbowl
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Post by scarbowl » Thu, 16 Feb 2012 4:56 pm

This is known as the Physical Presence Test. You have to be pretty precise about this. But, yes, it is based on the FILING date not the original due date. So it is common practice to file for extensions and stay OUT OF THE STATES for long enough to qualify. Assume the day of arrival and the day of departure from the USA counts as in-country. Instead of 330 out of the USA make it 335 just to be sure.

The other way to qualify is the Bona Fide Residence Test which is based on other factors including the length of your contract, nature of your visa, whether you are renting out your home in the States, whether you continue to have earned income from the States, whether you earn any $ while in the States, etc. That one doesn't require the 330 day test.

You can evaluate and use either one but best not to alternate.

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zzm9980
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Post by zzm9980 » Thu, 16 Feb 2012 5:05 pm

I will file an extension until I can pass physical presence test. Thanks!

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