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Amendment Taxes

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Amendment Taxes

Amendment taxes 11. Amendment taxes   Departing Aliens and the Sailing or Departure Permit Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Aliens Not Required To Obtain Sailing or Departure Permits Aliens Required To Obtain Sailing or Departure PermitsGetting a Sailing or Departure Permit Forms To File Paying Taxes and Obtaining Refunds Bond To Ensure Payment Filing Annual U. Amendment taxes S. Amendment taxes Income Tax Returns Introduction Before leaving the United States, all aliens (except those listed under Aliens Not Required To Obtain Sailing or Departure Permits must obtain a certificate of compliance. Amendment taxes This document, also popularly known as the sailing permit or departure permit, is part of the income tax form you must file before leaving. Amendment taxes You will receive a sailing or departure permit after filing a Form 1040-C or Form 2063. Amendment taxes These forms are discussed in this chapter. Amendment taxes To find out if you need a sailing or departure permit, first read Aliens Not Required To Obtain Sailing or Departure Permits . Amendment taxes If you do not fall into one of the categories in that discussion, you must obtain a sailing or departure permit. Amendment taxes Read Aliens Required To Obtain Sailing or Departure Permits . Amendment taxes Topics - This chapter discusses: Who needs a sailing permit, How to get a sailing permit, and Forms you file to get a sailing permit. Amendment taxes Useful Items - You may want to see: Form (and Instructions) 1040-C U. Amendment taxes S. Amendment taxes Departing Alien Income Tax Return 2063 U. Amendment taxes S. Amendment taxes Departing Alien Income Tax Statement See chapter 12 for information about getting these forms. Amendment taxes Aliens Not Required To Obtain Sailing or Departure Permits If you are included in one of the following categories, you do not have to get a sailing or departure permit before leaving the United States. Amendment taxes If you are in one of these categories and do not have to get a sailing or departure permit, you must be able to support your claim for exemption with proper identification or give the authority for the exemption. Amendment taxes Category 1. Amendment taxes   Representatives of foreign governments with diplomatic passports, whether accredited to the United States or other countries, members of their households, and servants accompanying them. Amendment taxes Servants who are leaving, but not with a person with a diplomatic passport, must get a sailing or departure permit. Amendment taxes However, they can get a sailing or departure permit on Form 2063 without examination of their income tax liability by presenting a letter from the chief of their diplomatic mission certifying that: Their name appears on the “White List” (a list of employees of diplomatic missions), and They do not owe to the United States any income tax, and will not owe any tax up to and including the intended date of departure. Amendment taxes   The statement must be presented to an IRS office. Amendment taxes Category 2. Amendment taxes    Employees of international organizations and foreign governments (other than diplomatic representatives exempt under category 1) and members of their households: Whose compensation for official services is exempt from U. Amendment taxes S. Amendment taxes tax under U. Amendment taxes S. Amendment taxes tax laws (described in chapter 10), and Who receive no other income from U. Amendment taxes S. Amendment taxes sources. Amendment taxes If you are an alien in category (1) or (2), above, who filed the waiver under section 247(b) of the Immigration and Nationality Act, you must get a sailing or departure permit. Amendment taxes This is true even if your income is exempt from U. Amendment taxes S. Amendment taxes tax because of an income tax treaty, consular agreement, or international agreement. Amendment taxes Category 3. Amendment taxes   Alien students, industrial trainees, and exchange visitors, including their spouses and children, who enter on an “F-1,” “F-2,” “H-3,” “H-4,” “J-1,” “J-2,” or “Q” visa only and who receive no income from U. Amendment taxes S. Amendment taxes sources while in the United States under those visas other than: Allowances to cover expenses incident to study or training in the United States, such as expenses for travel, maintenance, and tuition, The value of any services or food and lodging connected with this study or training, Income from employment authorized by the U. Amendment taxes S. Amendment taxes Citizenship and Immigration Services (USCIS), or Interest income on deposits that is not effectively connected with a U. Amendment taxes S. Amendment taxes trade or business. Amendment taxes (See Interest Income in chapter 3. Amendment taxes ) Category 4. Amendment taxes   Alien students, including their spouses and children, who enter on an “M-1” or “M-2” visa only and who receive no income from U. Amendment taxes S. Amendment taxes sources while in the United States under those visas, other than: Income from employment authorized by the U. Amendment taxes S. Amendment taxes Citizenship and Immigration Services (USCIS) or Interest income on deposits that is not effectively connected with a U. Amendment taxes S. Amendment taxes trade or business. Amendment taxes (See Interest Income in chapter 3. Amendment taxes ) Category 5. Amendment taxes   Certain other aliens temporarily in the United States who have received no taxable income during the tax year up to and including the date of departure or during the preceding tax year. Amendment taxes If the IRS has reason to believe that an alien has received income subject to tax and that the collection of income tax is jeopardized by departure, it may then require the alien to obtain a sailing or departure permit. Amendment taxes Aliens in this category are: Alien military trainees who enter the United States for training under the sponsorship of the Department of Defense and who leave the United States on official military travel orders, Alien visitors for business on a “B-1” visa, or on both a “B-1” visa and a “B-2” visa, who do not remain in the United States or a U. Amendment taxes S. Amendment taxes possession for more than 90 days during the tax year, Alien visitors for pleasure on a “B-2” visa, Aliens in transit through the United States or any of its possessions on a “C-1” visa, or under a contract, such as a bond agreement, between a transportation line and the Attorney General, and Aliens who enter the United States on a border-crossing identification card or for whom passports, visas, and border-crossing identification cards are not required, if they are: Visitors for pleasure, Visitors for business who do not remain in the United States or a U. Amendment taxes S. Amendment taxes possession for more than 90 days during the tax year, or In transit through the United States or any of its possessions. Amendment taxes Category 6. Amendment taxes   Alien residents of Canada or Mexico who frequently commute between that country and the United States for employment, and whose wages are subject to the withholding of U. Amendment taxes S. Amendment taxes tax. Amendment taxes Aliens Required To Obtain Sailing or Departure Permits If you do not fall into one of the categories listed under Aliens Not Required To Obtain Sailing or Departure Permits, you must obtain a sailing or departure permit. Amendment taxes To obtain a permit, file Form 1040-C or Form 2063 (whichever applies) with your local IRS office before you leave the United States. Amendment taxes See Forms To File , later. Amendment taxes You must also pay all the tax shown as due on Form 1040-C and any taxes due for past years. Amendment taxes See Paying Taxes and Obtaining Refunds , later. Amendment taxes Getting a Sailing or Departure Permit The following discussion covers when and where to get your sailing permit. Amendment taxes Where to get a sailing or departure permit. Amendment taxes   If you have been working in the United States, you should get the permit from an IRS office in the area of your employment, or you may obtain one from an IRS office in the area of your departure. Amendment taxes When to get a sailing or departure permit. Amendment taxes   You should get your sailing or departure permit at least 2 weeks before you plan to leave. Amendment taxes You cannot apply earlier than 30 days before your planned departure date. Amendment taxes Do not wait until the last minute in case there are unexpected problems. Amendment taxes Papers to submit. Amendment taxes   Getting your sailing or departure permit will go faster if you bring to the IRS office papers and documents related to your income and your stay in the United States. Amendment taxes Bring the following records with you if they apply. Amendment taxes Your passport and alien registration card or visa. Amendment taxes Copies of your U. Amendment taxes S. Amendment taxes income tax returns filed for the past 2 years. Amendment taxes If you were in the United States for less than 2 years, bring the income tax returns you filed for that period. Amendment taxes Receipts for income taxes paid on these returns. Amendment taxes Receipts, bank records, canceled checks, and other documents that prove your deductions, business expenses, and dependents claimed on your returns. Amendment taxes A statement from each employer showing wages paid and tax withheld from January 1 of the current year to the date of departure if you were an employee. Amendment taxes If you were self-employed, you must bring a statement of income and expenses up to the date you plan to leave. Amendment taxes Proof of estimated tax payments for the past year and this year. Amendment taxes Documents showing any gain or loss from the sale of personal property and/or real property, including capital assets and merchandise. Amendment taxes Documents relating to scholarship or fellowship grants including: Verification of the grantor, source, and purpose of the grant. Amendment taxes Copies of the application for, and approval of, the grant. Amendment taxes A statement of the amount paid, and your duties and obligations under the grant. Amendment taxes A list of any previous grants. Amendment taxes Documents indicating you qualify for any special tax treaty benefits claimed. Amendment taxes Document verifying your date of departure from the United States, such as an airline ticket. Amendment taxes Document verifying your U. Amendment taxes S. Amendment taxes taxpayer identification number, such as a social security card or an IRS issued Notice CP 565 showing your individual taxpayer identification number (ITIN). Amendment taxes Note. Amendment taxes   If you are married and reside in a community property state, also bring the above-listed documents for your spouse. Amendment taxes This applies whether or not your spouse requires a permit. Amendment taxes Forms To File If you must get a sailing or departure permit, you must file Form 2063 or Form 1040-C. Amendment taxes Employees in the IRS office can assist in filing these forms. Amendment taxes Both forms have a “certificate of compliance” section. Amendment taxes When the certificate of compliance is signed by an agent of the Field Assistance Area Director, it certifies that your U. Amendment taxes S. Amendment taxes tax obligations have been satisfied according to available information. Amendment taxes Your Form 1040-C copy of the signed certificate, or the one detached from Form 2063, is your sailing or departure permit. Amendment taxes Form 2063 This is a short form that asks for certain information but does not include a tax computation. Amendment taxes The following departing aliens can get their sailing or departure permits by filing Form 2063. Amendment taxes Aliens, whether resident or nonresident, who have had no taxable income for the tax year up to and including the date of departure and for the preceding year, if the period for filing the income tax return for that year has not expired. Amendment taxes Resident aliens who have received taxable income during the tax year or preceding year and whose departure will not hinder the collection of any tax. Amendment taxes However, if the IRS has information indicating that the aliens are leaving to avoid paying their income tax, they must file a Form 1040-C. Amendment taxes Aliens in either of these categories who have not filed an income tax return or paid income tax for any tax year must file the return and pay the income tax before they can be issued a sailing or departure permit on Form 2063. Amendment taxes The sailing or departure permit detached from Form 2063 can be used for all departures during the current year. Amendment taxes However, the IRS may cancel the sailing or departure permit for any later departure if it believes the collection of income tax is jeopardized by that later departure. Amendment taxes Form 1040-C If you must get a sailing or departure permit and you do not qualify to file Form 2063, you must file Form 1040-C. Amendment taxes Ordinarily, all income received or reasonably expected to be received during the tax year up to and including the date of departure must be reported on Form 1040-C and the tax on it must be paid. Amendment taxes When you pay any tax shown as due on the Form 1040-C, and you file all returns and pay all tax due for previous years, you will receive a sailing or departure permit. Amendment taxes However, the IRS may permit you to furnish a bond guaranteeing payment instead of paying the taxes for certain years. Amendment taxes See Bond To Ensure Payment , discussed later. Amendment taxes The sailing or departure permit issued under the conditions in this paragraph is only for the specific departure for which it is issued. Amendment taxes Returning to the United States. Amendment taxes   If you furnish the IRS with information showing, to the satisfaction of the IRS, that you intend to return to the United States and that your departure does not jeopardize the collection of income tax, you can get a sailing or departure permit by filing Form 1040-C without having to pay the tax shown on it. Amendment taxes You must, however, file all income tax returns that have not yet been filed as required, and pay all income tax that is due on these returns. Amendment taxes   Your Form 1040-C must include all income received and reasonably expected to be received during the entire year of departure. Amendment taxes The sailing or departure permit issued with this Form 1040-C can be used for all departures during the current year. Amendment taxes However, the Service may cancel the sailing or departure permit for any later departure if the payment of income tax appears to be in jeopardy. Amendment taxes Joint return on Form 1040-C. Amendment taxes   Departing husbands and wives who are nonresident aliens cannot file joint returns. Amendment taxes However, if both spouses are resident aliens, they can file a joint return on Form 1040-C if: Both spouses can reasonably be expected to qualify to file a joint return at the normal close of their tax year, and The tax years of the spouses end at the same time. Amendment taxes Paying Taxes and Obtaining Refunds You must pay all tax shown as due on the Form 1040-C at the time of filing it, except when a bond is furnished, or the IRS is satisfied that your departure does not jeopardize the collection of income tax. Amendment taxes You must also pay any taxes due for past years. Amendment taxes If the tax computation on Form 1040-C results in an overpayment, there is no tax to pay at the time you file that return. Amendment taxes However, the IRS cannot provide a refund at the time of departure. Amendment taxes If you are due a refund, you must file either Form 1040NR or Form 1040NR-EZ at the end of the tax year. Amendment taxes Bond To Ensure Payment Usually, you must pay the tax shown as due on Form 1040-C when you file it. Amendment taxes However, if you pay all taxes due that you owe for prior years, you can furnish a bond guaranteeing payment instead of paying the income taxes shown as due on the Form 1040-C or the tax return for the preceding year if the period for filing that return has not expired. Amendment taxes The bond must equal the tax due plus interest to the date of payment as figured by the IRS. Amendment taxes Information about the form of bond and security on it can be obtained from your IRS office. Amendment taxes Filing Annual U. Amendment taxes S. Amendment taxes Income Tax Returns Form 1040-C is not an annual U. Amendment taxes S. Amendment taxes income tax return. Amendment taxes If an income tax return is required by law, that return must be filed even though a Form 1040-C has already been filed. Amendment taxes Chapters 5 and 7 discuss filing an annual U. Amendment taxes S. Amendment taxes income tax return. Amendment taxes The tax paid with Form 1040-C should be taken as a credit against the tax liability for the entire tax year on your annual U. Amendment taxes S. Amendment taxes income tax return. Amendment taxes Prev  Up  Next   Home   More Online Publications
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Consumer Protection Offices

City, county, regional, and state consumer offices offer a variety of important services. They might mediate complaints, conduct investigations, prosecute offenders of consumer laws, license and regulate professional service providers, provide educational materials and advocate for consumer rights. To save time, call before sending a written complaint. Ask if the office handles the type of complaint you have and if complaint forms are provided.

State Consumer Protection Offices

Kentucky Office of the Attorney General

Website: Kentucky Office of the Attorney General

Address: Kentucky Office of the Attorney General
Consumer Protection Division
1024 Capital Center Dr.
Frankfort, KY 40601

Phone Number: 502-696-5389

Toll-free: 1-888-432-9257 (Hotline)

Kentucky Office of the Attorney General - Louisville

Website: Kentucky Office of the Attorney General - Louisville

Address: Kentucky Office of the Attorney General - Louisville
Consumer Protection Division
310 Whittington Pkwy., Suite 101
Louisville, KY 40222

Phone Number: 502-429-7134

Toll-free: 1-888-432-9257 (Hotline)

Kentucky Office of the Attorney General - Prestonsburg

Website: Kentucky Office of the Attorney General - Prestonsburg

Address: Kentucky Office of the Attorney General - Prestonsburg
361 N. Lake Dr.
Prestonsburg, KY 41653

Phone Number: 606-889-1821

Toll-free: 1-888-432-9257 (Hotline)

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Banking Authorities

The officials listed in this section regulate and supervise state-chartered banks. Many of them handle or refer problems and complaints about other types of financial institutions as well. Some also answer general questions about banking and consumer credit. If you are dealing with a federally chartered bank, check Federal Agencies.

Department of Financial Institutions

Website: Department of Financial Institutions

Address: Department of Financial Institutions
1025 Capitol Center Dr., Suite 200
Frankfort, KY 40601

Phone Number: 502-573-3390

Toll-free: 1-800-223-2579

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Insurance Regulators

Each state has its own laws and regulations for each type of insurance. The officials listed in this section enforce these laws. Many of these offices can also provide you with information to help you make informed insurance buying decisions.

Department of Insurance

Website: Department of Insurance

Address: Department of Insurance
Consumer Protection Division
PO Box 517
Frankfort, KY 40602-0517

Phone Number: 502-564-6034

Toll-free: 1-800-595-6053

TTY: 1-800-648-6056

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Securities Administrators

Each state has its own laws and regulations for securities brokers and securities - including stocks, mutual funds, commodities, real estate, etc. The officials and agencies listed in this section enforce these laws and regulations. Many of these offices can also provide information to help you make informed investment decisions.

Department of Financial Institutions

Website: Department of Financial Institutions

Address: Department of Financial Institutions
Securities Division
1025 Capitol Center Dr., Suite 200
Frankfort, KY 40601

Phone Number: 502-573-3390

Toll-free: 1-800-223-2579

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Utility Commissions

State Utility Commissions regulate services and rates for gas, electricity and telephones within your state. In some states, the utility commissions regulate other services such as water, transportation, and the moving of household goods. Many utility commissions handle consumer complaints. Sometimes, if a number of complaints are received about the same utility matter, they will conduct investigations.

Public Service Commission

Website: Public Service Commission

Address: Public Service Commission
Consumer Services
PO Box 615
Frankfort, KY 40602

Phone Number: 502-564-3940

Toll-free: 1-800-772-4636

TTY: 1-800-648-6056

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The Amendment Taxes

Amendment taxes 4. Amendment taxes   Foreign Earned Income and Housing: Exclusion – Deduction Table of Contents Topics - This chapter discusses: Useful Items - You may want to see: Who Qualifies for the Exclusions and the Deduction? RequirementsTax Home in Foreign Country Bona Fide Residence Test Physical Presence Test Waiver of Time Requirements U. Amendment taxes S. Amendment taxes Travel Restrictions Foreign Earned Income Foreign Earned Income ExclusionLimit on Excludable Amount Choosing the Exclusion Foreign Housing Exclusion and DeductionHousing Amount Foreign Housing Exclusion Foreign Housing Deduction Married Couples Form 2555 and Form 2555-EZForm 2555-EZ Form 2555 Topics - This chapter discusses: Who qualifies for the foreign earned income exclusion, the foreign housing exclusion, and the foreign housing deduction, The requirements that must be met to claim either exclusion or the deduction, How to figure the foreign earned income exclusion, and How to figure the foreign housing exclusion and the foreign housing deduction. Amendment taxes Useful Items - You may want to see: Publication 519 U. Amendment taxes S. Amendment taxes Tax Guide for Aliens 570 Tax Guide for Individuals With Income from U. Amendment taxes S. Amendment taxes Possessions 596 Earned Income Credit (EIC) Form (and Instructions) 1040X Amended U. Amendment taxes S. Amendment taxes Individual Income Tax Return 2555 Foreign Earned Income 2555-EZ Foreign Earned Income Exclusion See chapter 7 for information about getting these publications and forms. Amendment taxes Who Qualifies for the Exclusions and the Deduction? If you meet certain requirements, you may qualify for the foreign earned income and foreign housing exclusions and the foreign housing deduction. Amendment taxes If you are a U. Amendment taxes S. Amendment taxes citizen or a resident alien of the United States and you live abroad, you are taxed on your worldwide income. Amendment taxes However, you may qualify to exclude from income up to $97,600 of your foreign earnings. Amendment taxes In addition, you can exclude or deduct certain foreign housing amounts. Amendment taxes See Foreign Earned Income Exclusion and Foreign Housing Exclusion and Deduction, later. Amendment taxes You also may be entitled to exclude from income the value of meals and lodging provided to you by your employer. Amendment taxes See Exclusion of Meals and Lodging, later. Amendment taxes Requirements To claim the foreign earned income exclusion, the foreign housing exclusion, or the foreign housing deduction, you must meet all three of the following requirements. Amendment taxes Your tax home must be in a foreign country. Amendment taxes You must have foreign earned income. Amendment taxes You must be one of the following. Amendment taxes A U. Amendment taxes S. Amendment taxes citizen who is a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year. Amendment taxes A U. Amendment taxes S. Amendment taxes 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. Amendment taxes A U. Amendment taxes S. Amendment taxes citizen or a U. Amendment taxes S. Amendment taxes 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. Amendment taxes See Publication 519 to find out if you are a U. Amendment taxes S. Amendment taxes resident alien for tax purposes and whether you keep that alien status when you temporarily work abroad. Amendment taxes If you are a nonresident alien married to a U. Amendment taxes S. Amendment taxes citizen or resident alien, and both you and your spouse choose to treat you as a resident alien, you are a resident alien for tax purposes. Amendment taxes For information on making the choice, see the discussion in chapter 1 under Nonresident Alien Spouse Treated as a Resident . Amendment taxes Waiver of minimum time requirements. Amendment taxes   The minimum time requirements for bona fide residence and physical presence can be waived if you must leave a foreign country because of war, civil unrest, or similar adverse conditions in that country. Amendment taxes This is fully explained under Waiver of Time Requirements , later. Amendment taxes   See Figure 4-A and information in this chapter to determine if you are eligible to claim either exclusion or the deduction. Amendment taxes Tax Home in Foreign Country To qualify for the foreign earned income exclusion, the foreign housing exclusion, or the foreign housing deduction, your tax home must be in a foreign country throughout your period of bona fide residence or physical presence abroad. Amendment taxes Bona fide residence and physical presence are explained later. Amendment taxes Tax Home Your tax home is the general area of your main place of business, employment, or post of duty, regardless of where you maintain your family home. Amendment taxes Your tax home is the place where you are permanently or indefinitely engaged to work as an employee or self-employed individual. Amendment taxes Having a “tax home” in a given location does not necessarily mean that the given location is your residence or domicile for tax purposes. Amendment taxes If you do not have a regular or main place of business because of the nature of your work, your tax home may be the place where you regularly live. Amendment taxes If you have neither a regular or main place of business nor a place where you regularly live, you are considered an itinerant and your tax home is wherever you work. Amendment taxes You are not considered to have a tax home in a foreign country for any period in which your abode is in the United States. Amendment taxes However, your abode is not necessarily in the United States while you are temporarily in the United States. Amendment taxes Your abode is also not necessarily in the United States merely because you maintain a dwelling in the United States, whether or not your spouse or dependents use the dwelling. Amendment taxes “Abode” has been variously defined as one's home, habitation, residence, domicile, or place of dwelling. Amendment taxes It does not mean your principal place of business. Amendment taxes “Abode” has a domestic rather than a vocational meaning and does not mean the same as “tax home. Amendment taxes ” The location of your abode often will depend on where you maintain your economic, family, and personal ties. Amendment taxes Example 1. Amendment taxes You are employed on an offshore oil rig in the territorial waters of a foreign country and work a 28-day on/28-day off schedule. Amendment taxes You return to your family residence in the United States during your off periods. Amendment taxes You are considered to have an abode in the United States and do not satisfy the tax home test in the foreign country. Amendment taxes You cannot claim either of the exclusions or the housing deduction. Amendment taxes Example 2. Amendment taxes For several years, you were a marketing executive with a producer of machine tools in Toledo, Ohio. Amendment taxes In November of last year, your employer transferred you to London, England, for a minimum of 18 months to set up a sales operation for Europe. Amendment taxes Before you left, you distributed business cards showing your business and home addresses in London. Amendment taxes You kept ownership of your home in Toledo but rented it to another family. Amendment taxes You placed your car in storage. Amendment taxes In November of last year, you moved your spouse, children, furniture, and family pets to a home your employer rented for you in London. Amendment taxes Shortly after moving, you leased a car and you and your spouse got British driving licenses. Amendment taxes Your entire family got library cards for the local public library. Amendment taxes You and your spouse opened bank accounts with a London bank and secured consumer credit. Amendment taxes You joined a local business league and both you and your spouse became active in the neighborhood civic association and worked with a local charity. Amendment taxes Your abode is in London for the time you live there. Amendment taxes You satisfy the tax home test in the foreign country. Amendment taxes Please click here for the text description of the image. Amendment taxes Figure 4–A Can I Claim the Exclusion or Deduction? Temporary or Indefinite Assignment The location of your tax home often depends on whether your assignment is temporary or indefinite. Amendment taxes If you are temporarily absent from your tax home in the United States on business, you may be able to deduct your away-from-home expenses (for travel, meals, and lodging), but you would not qualify for the foreign earned income exclusion. Amendment taxes If your new work assignment is for an indefinite period, your new place of employment becomes your tax home and you would not be able to deduct any of the related expenses that you have in the general area of this new work assignment. Amendment taxes If your new tax home is in a foreign country and you meet the other requirements, your earnings may qualify for the foreign earned income exclusion. Amendment taxes If you expect your employment away from home in a single location to last, and it does last, for 1 year or less, it is temporary unless facts and circumstances indicate otherwise. Amendment taxes If you expect it to last for more than 1 year, it is indefinite. Amendment taxes If you expect it to last for 1 year or less, but at some later date you expect it to last longer than 1 year, it is temporary (in the absence of facts and circumstances indicating otherwise) until your expectation changes. Amendment taxes Once your expectation changes, it is indefinite. Amendment taxes Foreign Country To meet the bona fide residence test or the physical presence test, you must live in or be present in a foreign country. Amendment taxes A foreign country includes any territory under the sovereignty of a government other than that of the United States. Amendment taxes The term “foreign country” includes the country's airspace and territorial waters, but not international waters and the airspace above them. Amendment taxes It also includes the seabed and subsoil of those submarine areas adjacent to the country's territorial waters over which it has exclusive rights under international law to explore and exploit the natural resources. Amendment taxes The term “foreign country” does not include Antarctica or U. Amendment taxes S. Amendment taxes possessions such as Puerto Rico, Guam, the Commonwealth of the Northern Mariana Islands, the U. Amendment taxes S. Amendment taxes Virgin Islands, and Johnston Island. Amendment taxes For purposes of the foreign earned income exclusion, the foreign housing exclusion, and the foreign housing deduction, the terms “foreign,” “abroad,” and “overseas” refer to areas outside the United States and those areas listed or described in the previous sentence. Amendment taxes American Samoa, Guam, and the Commonwealth of the Northern Mariana Islands Residence or presence in a U. Amendment taxes S. Amendment taxes possession does not qualify you for the foreign earned income exclusion. Amendment taxes You may, however, qualify for an exclusion of your possession income on your U. Amendment taxes S. Amendment taxes return. Amendment taxes American Samoa. Amendment taxes   There is a possession exclusion available to individuals who are bona fide residents of American Samoa for the entire tax year. Amendment taxes Gross income from sources within American Samoa may be eligible for this exclusion. Amendment taxes Income that is effectively connected with the conduct of a trade or business within American Samoa also may be eligible for this exclusion. Amendment taxes Use Form 4563, Exclusion of Income for Bona Fide Residents of American Samoa, to figure the exclusion. Amendment taxes Guam and the Commonwealth of the Northern Mariana Islands. Amendment taxes   An exclusion will be available to residents of Guam and the Commonwealth of the Northern Mariana Islands if, and when, new implementation agreements take effect between the United States and those possessions. Amendment taxes   For more information, see Publication 570. Amendment taxes Puerto Rico and U. Amendment taxes S. Amendment taxes Virgin Islands Residents of Puerto Rico and the U. Amendment taxes S. Amendment taxes Virgin Islands cannot claim the foreign earned income exclusion or the foreign housing exclusion. Amendment taxes Puerto Rico. Amendment taxes   Generally, if you are a U. Amendment taxes S. Amendment taxes citizen who is a bona fide resident of Puerto Rico for the entire tax year, you are not subject to U. Amendment taxes S. Amendment taxes tax on income from Puerto Rican sources. Amendment taxes This does not include amounts paid for services performed as an employee of the United States. Amendment taxes However, you are subject to U. Amendment taxes S. Amendment taxes tax on your income from sources outside Puerto Rico. Amendment taxes In figuring your U. Amendment taxes S. Amendment taxes tax, you cannot deduct expenses allocable to income not subject to tax. Amendment taxes Bona Fide Residence Test You meet the bona fide residence test if you are a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year. Amendment taxes You can use the bona fide residence test to qualify for the exclusions and the deduction only if you are either: A U. Amendment taxes S. Amendment taxes citizen, or A U. Amendment taxes S. Amendment taxes resident alien who is a citizen or national of a country with which the United States has an income tax treaty in effect. Amendment taxes You do not automatically acquire bona fide resident status merely by living in a foreign country or countries for 1 year. Amendment taxes If you go to a foreign country to work on a particular job for a specified period of time, you ordinarily will not be regarded as a bona fide resident of that country even though you work there for 1 tax year or longer. Amendment taxes The length of your stay and the nature of your job are only two of the factors to be considered in determining whether you meet the bona fide residence test. Amendment taxes Bona fide residence. Amendment taxes   To meet the bona fide residence test, you must have established a bona fide residence in a foreign country. Amendment taxes   Your bona fide residence is not necessarily the same as your domicile. Amendment taxes Your domicile is your permanent home, the place to which you always return or intend to return. Amendment taxes Example. Amendment taxes You could have your domicile in Cleveland, Ohio, and a bona fide residence in Edinburgh, Scotland, if you intend to return eventually to Cleveland. Amendment taxes The fact that you go to Scotland does not automatically make Scotland your bona fide residence. Amendment taxes If you go there as a tourist, or on a short business trip, and return to the United States, you have not established bona fide residence in Scotland. Amendment taxes But if you go to Scotland to work for an indefinite or extended period and you set up permanent quarters there for yourself and your family, you probably have established a bona fide residence in a foreign country, even though you intend to return eventually to the United States. Amendment taxes You are clearly not a resident of Scotland in the first instance. Amendment taxes However, in the second, you are a resident because your stay in Scotland appears to be permanent. Amendment taxes If your residency is not as clearly defined as either of these illustrations, it may be more difficult to decide whether you have established a bona fide residence. Amendment taxes Determination. Amendment taxes   Questions of bona fide residence are determined according to each individual case, taking into account factors such as your intention, the purpose of your trip, and the nature and length of your stay abroad. Amendment taxes   To meet the bona fide residence test, you must show the Internal Revenue Service (IRS) that you have been a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year. Amendment taxes The IRS decides whether you are a bona fide resident of a foreign country largely on the basis of facts you report on Form 2555. Amendment taxes IRS cannot make this determination until you file Form 2555. Amendment taxes Statement to foreign authorities. Amendment taxes   You are not considered a bona fide resident of a foreign country if you make a statement to the authorities of that country that you are not a resident of that country, and the authorities: Hold that you are not subject to their income tax laws as a resident, or Have not made a final decision on your status. Amendment taxes Special agreements and treaties. Amendment taxes   An income tax exemption provided in a treaty or other international agreement will not in itself prevent you from being a bona fide resident of a foreign country. Amendment taxes Whether a treaty prevents you from becoming a bona fide resident of a foreign country is determined under all provisions of the treaty, including specific provisions relating to residence or privileges and immunities. Amendment taxes Example 1. Amendment taxes You are a U. Amendment taxes S. Amendment taxes citizen employed in the United Kingdom by a U. Amendment taxes S. Amendment taxes employer under contract with the U. Amendment taxes S. Amendment taxes Armed Forces. Amendment taxes You are not subject to the North Atlantic Treaty Status of Forces Agreement. Amendment taxes You may be a bona fide resident of the United Kingdom. Amendment taxes Example 2. Amendment taxes You are a U. Amendment taxes S. Amendment taxes citizen in the United Kingdom who qualifies as an “employee” of an armed service or as a member of a “civilian component” under the North Atlantic Treaty Status of Forces Agreement. Amendment taxes You are not a bona fide resident of the United Kingdom. Amendment taxes Example 3. Amendment taxes You are a U. Amendment taxes S. Amendment taxes citizen employed in Japan by a U. Amendment taxes S. Amendment taxes employer under contract with the U. Amendment taxes S. Amendment taxes Armed Forces. Amendment taxes You are subject to the agreement of the Treaty of Mutual Cooperation and Security between the United States and Japan. Amendment taxes Being subject to the agreement does not make you a bona fide resident of Japan. Amendment taxes Example 4. Amendment taxes You are a U. Amendment taxes S. Amendment taxes citizen employed as an “official” by the United Nations in Switzerland. Amendment taxes You are exempt from Swiss taxation on the salary or wages paid to you by the United Nations. Amendment taxes This does not prevent you from being a bona fide resident of Switzerland. Amendment taxes Effect of voting by absentee ballot. Amendment taxes   If you are a U. Amendment taxes S. Amendment taxes citizen living abroad, you can vote by absentee ballot in any election held in the United States without risking your status as a bona fide resident of a foreign country. Amendment taxes   However, if you give information to the local election officials about the nature and length of your stay abroad that does not match the information you give for the bona fide residence test, the information given in connection with absentee voting will be considered in determining your status, but will not necessarily be conclusive. Amendment taxes Uninterrupted period including entire tax year. Amendment taxes   To meet the bona fide residence test, you must reside in a foreign country or countries for an uninterrupted period that includes an entire tax year. Amendment taxes An entire tax year is from January 1 through December 31 for taxpayers who file their income tax returns on a calendar year basis. Amendment taxes   During the period of bona fide residence in a foreign country, you can leave the country for brief or temporary trips back to the United States or elsewhere for vacation or business. Amendment taxes To keep your status as a bona fide resident of a foreign country, you must have a clear intention of returning from such trips, without unreasonable delay, to your foreign residence or to a new bona fide residence in another foreign country. Amendment taxes Example 1. Amendment taxes You arrived with your family in Lisbon, Portugal, on November 1, 2011. Amendment taxes Your assignment is indefinite, and you intend to live there with your family until your company sends you to a new post. Amendment taxes You immediately established residence there. Amendment taxes You spent April of 2012 at a business conference in the United States. Amendment taxes Your family stayed in Lisbon. Amendment taxes Immediately following the conference, you returned to Lisbon and continued living there. Amendment taxes On January 1, 2013, you completed an uninterrupted period of residence for a full tax year (2012), and you meet the bona fide residence test. Amendment taxes Example 2. Amendment taxes Assume the same facts as in Example 1, except that you transferred back to the United States on December 13, 2012. Amendment taxes You would not meet the bona fide residence test because your bona fide residence in the foreign country, although it lasted more than a year, did not include a full tax year. Amendment taxes You may, however, qualify for the foreign earned income exclusion or the housing exclusion or deduction under the physical presence test (discussed later). Amendment taxes Bona fide resident for part of a year. Amendment taxes   Once you have established bona fide residence in a foreign country for an uninterrupted period that includes an entire tax year, you are a bona fide resident of that country for the period starting with the date you actually began the residence and ending with the date you abandon the foreign residence. Amendment taxes Your period of bona fide residence can include an entire tax year plus parts of 2 other tax years. Amendment taxes Example. Amendment taxes You were a bona fide resident of Singapore from March 1, 2011, through September 14, 2013. Amendment taxes On September 15, 2013, you returned to the United States. Amendment taxes Since you were a bona fide resident of a foreign country for all of 2012, you were also a bona fide resident of a foreign country from March 1, 2011, through the end of 2011 and from January 1, 2013, through September 14, 2013. Amendment taxes Reassignment. Amendment taxes   If you are assigned from one foreign post to another, you may or may not have a break in foreign residence between your assignments, depending on the circumstances. Amendment taxes Example 1. Amendment taxes You were a resident of Pakistan from October 1, 2012, through November 30, 2013. Amendment taxes On December 1, 2013, you and your family returned to the United States to wait for an assignment to another foreign country. Amendment taxes Your household goods also were returned to the United States. Amendment taxes Your foreign residence ended on November 30, 2013, and did not begin again until after you were assigned to another foreign country and physically entered that country. Amendment taxes Since you were not a bona fide resident of a foreign country for the entire tax year of 2012 or 2013 you do not meet the bona fide residence test in either year. Amendment taxes You may, however, qualify for the foreign earned income exclusion or the housing exclusion or deduction under the physical presence test, discussed later. Amendment taxes Example 2. Amendment taxes Assume the same facts as in Example 1, except that upon completion of your assignment in Pakistan you were given a new assignment to Turkey. Amendment taxes On December 1, 2013, you and your family returned to the United States for a month's vacation. Amendment taxes On January 2, 2014, you arrived in Turkey for your new assignment. Amendment taxes Because you did not interrupt your bona fide residence abroad, you meet the bona fide residence test. Amendment taxes Physical Presence Test You meet the physical presence test if you are physically present in a foreign country or countries 330 full days during a period of 12 consecutive months. Amendment taxes The 330 days do not have to be consecutive. Amendment taxes Any U. Amendment taxes S. Amendment taxes citizen or resident alien can use the physical presence test to qualify for the exclusions and the deduction. Amendment taxes The physical presence test is based only on how long you stay in a foreign country or countries. Amendment taxes This test does not depend on the kind of residence you establish, your intentions about returning, or the nature and purpose of your stay abroad. Amendment taxes 330 full days. Amendment taxes   Generally, to meet the physical presence test, you must be physically present in a foreign country or countries for at least 330 full days during a 12-month period. Amendment taxes You can count days you spent abroad for any reason. Amendment taxes You do not have to be in a foreign country only for employment purposes. Amendment taxes You can be on vacation. Amendment taxes   You do not meet the physical presence test if illness, family problems, a vacation, or your employer's orders cause you to be present for less than the required amount of time. Amendment taxes Exception. Amendment taxes   You can be physically present in a foreign country or countries for less than 330 full days and still meet the physical presence test if you are required to leave a country because of war or civil unrest. Amendment taxes See Waiver of Time Requirements, later. Amendment taxes Full day. Amendment taxes   A full day is a period of 24 consecutive hours, beginning at midnight. Amendment taxes Travel. Amendment taxes    When you leave the United States to go directly to a foreign country or when you return directly to the United States from a foreign country, the time you spend on or over international waters does not count toward the 330-day total. Amendment taxes Example. Amendment taxes You leave the United States for France by air on June 10. Amendment taxes You arrive in France at 9:00 a. Amendment taxes m. Amendment taxes on June 11. Amendment taxes Your first full day of physical presence in France is June 12. Amendment taxes Passing over foreign country. Amendment taxes   If, in traveling from the United States to a foreign country, you pass over a foreign country before midnight of the day you leave, the first day you can count toward the 330-day total is the day following the day you leave the United States. Amendment taxes Example. Amendment taxes You leave the United States by air at 9:30 a. Amendment taxes m. Amendment taxes on June 10 to travel to Kenya. Amendment taxes You pass over western Africa at 11:00 p. Amendment taxes m. Amendment taxes on June 10 and arrive in Kenya at 12:30 a. Amendment taxes m. Amendment taxes on June 11. Amendment taxes Your first full day in a foreign country is June 11. Amendment taxes Change of location. Amendment taxes   You can move about from one place to another in a foreign country or to another foreign country without losing full days. Amendment taxes If any part of your travel is not within any foreign country and takes less than 24 hours, you are considered to be in a foreign country during that part of travel. Amendment taxes Example 1. Amendment taxes You leave Ireland by air at 11:00 p. Amendment taxes m. Amendment taxes on July 6 and arrive in Sweden at 5:00 a. Amendment taxes m. Amendment taxes on July 7. Amendment taxes Your trip takes less than 24 hours and you lose no full days. Amendment taxes Example 2. Amendment taxes You leave Norway by ship at 10:00 p. Amendment taxes m. Amendment taxes on July 6 and arrive in Portugal at 6:00 a. Amendment taxes m. Amendment taxes on July 8. Amendment taxes Since your travel is not within a foreign country or countries and the trip takes more than 24 hours, you lose as full days July 6, 7, and 8. Amendment taxes If you remain in Portugal, your next full day in a foreign country is July 9. Amendment taxes In United States while in transit. Amendment taxes   If you are in transit between two points outside the United States and are physically present in the United States for less than 24 hours, you are not treated as present in the United States during the transit. Amendment taxes You are treated as traveling over areas not within any foreign country. Amendment taxes    Please click here for the text description of the image. Amendment taxes Figure 4-B How to figure the 12-month period. Amendment taxes   There are four rules you should know when figuring the 12-month period. Amendment taxes Your 12-month period can begin with any day of the month. Amendment taxes It ends the day before the same calendar day, 12 months later. Amendment taxes Your 12-month period must be made up of consecutive months. Amendment taxes Any 12-month period can be used if the 330 days in a foreign country fall within that period. Amendment taxes You do not have to begin your 12-month period with your first full day in a foreign country or end it with the day you leave. Amendment taxes You can choose the 12-month period that gives you the greatest exclusion. Amendment taxes In determining whether the 12-month period falls within a longer stay in the foreign country, 12-month periods can overlap one another. Amendment taxes Example 1. Amendment taxes You are a construction worker who works on and off in a foreign country over a 20-month period. Amendment taxes You might pick up the 330 full days in a 12-month period only during the middle months of the time you work in the foreign country because the first few and last few months of the 20-month period are broken up by long visits to the United States. Amendment taxes Example 2. Amendment taxes You work in New Zealand for a 20-month period from January 1, 2012, through August 31, 2013, except that you spend 28 days in February 2012 and 28 days in February 2013 on vacation in the United States. Amendment taxes You are present in New Zealand for at least 330 full days during each of the following two 12-month periods: January 1, 2012 – December 31, 2012 and September 1, 2012 – August 31, 2013. Amendment taxes By overlapping the 12-month periods in this way, you meet the physical presence test for the whole 20-month period. Amendment taxes See Figure 4-B, on the previous page. Amendment taxes Waiver of Time Requirements Both the bona fide residence test and the physical presence test contain minimum time requirements. Amendment taxes The minimum time requirements can be waived, however, if you must leave a foreign country because of war, civil unrest, or similar adverse conditions in that country. Amendment taxes You must be able to show that you reasonably could have expected to meet the minimum time requirements if not for the adverse conditions. Amendment taxes To qualify for the waiver, you must actually have your tax home in the foreign country and be a bona fide resident of, or be physically present in, the foreign country on or before the beginning date of the waiver. Amendment taxes Early in 2014, the IRS will publish in the Internal Revenue Bulletin a list of the only countries that qualify for the waiver for 2013 and the effective dates. Amendment taxes If you left one of the countries on or after the date listed for each country, you can meet the bona fide residence test or physical presence test for 2013 without meeting the minimum time requirement. Amendment taxes However, in figuring your exclusion, the number of your qualifying days of bona fide residence or physical presence includes only days of actual residence or presence within the country. Amendment taxes U. Amendment taxes S. Amendment taxes Travel Restrictions If you are present in a foreign country in violation of U. Amendment taxes S. Amendment taxes law, you will not be treated as a bona fide resident of a foreign country or as physically present in a foreign country while you are in violation of the law. Amendment taxes Income that you earn from sources within such a country for services performed during a period of violation does not qualify as foreign earned income. Amendment taxes Your housing expenses within that country (or outside that country for housing your spouse or dependents) while you are in violation of the law cannot be included in figuring your foreign housing amount. Amendment taxes For 2013, the only country to which travel restrictions applied was Cuba. Amendment taxes The restrictions applied for the entire year. Amendment taxes However, individuals working at the U. Amendment taxes S. Amendment taxes Naval Base at Guantanamo Bay in Cuba are not in violation of U. Amendment taxes S. Amendment taxes law. Amendment taxes Personal service income earned by individuals at the base is eligible for the foreign earned income exclusion provided the other requirements are met. Amendment taxes Foreign Earned Income To claim the foreign earned income exclusion, the foreign housing exclusion, or the foreign housing deduction, you must have foreign earned income. Amendment taxes Foreign earned income generally is income you receive for services you perform during a period in which you meet both of the following requirements. Amendment taxes Your tax home is in a foreign country. Amendment taxes You meet either the bona fide residence test or the physical presence test. Amendment taxes To determine whether your tax home is in a foreign country, see Tax Home in Foreign Country, earlier. Amendment taxes To determine whether you meet either the bona fide residence test or the physical presence test, see Bona Fide Residence Test and Physical Presence Test, earlier. Amendment taxes Foreign earned income does not include the following amounts. Amendment taxes The value of meals and lodging that you exclude from your income because the meals and lodging were furnished for the convenience of your employer. Amendment taxes Pension or annuity payments you receive, including social security benefits (see Pensions and annuities, later). Amendment taxes Pay you receive as an employee of the U. Amendment taxes S. Amendment taxes Government. Amendment taxes (See U. Amendment taxes S. Amendment taxes Government Employees, later. Amendment taxes ) Amounts you include in your income because of your employer's contributions to a nonexempt employee trust or to a nonqualified annuity contract. Amendment taxes Any unallowable moving expense deduction that you choose to recapture as explained under Moving Expense Attributable to Foreign Earnings in 2 Years in chapter 5. Amendment taxes Payments you receive after the end of the tax year following the tax year in which you performed the services that earned the income. Amendment taxes Earned income. Amendment taxes   This is pay for personal services performed, such as wages, salaries, or professional fees. Amendment taxes The list that follows classifies many types of income into three categories. Amendment taxes The column headed Variable Income lists income that may fall into either the earned income category, the unearned income category, or partly into both. Amendment taxes For more information on earned and unearned income, see Earned and Unearned Income, later. Amendment taxes Earned Income Unearned Income Variable Income Salaries and wages Dividends Business profits Commissions Interest Royalties Bonuses Capital gains Rents Professional fees Gambling winnings Scholarships and fellowships Tips Alimony     Social security benefits     Pensions     Annuities     In addition to the types of earned income listed, certain noncash income and allowances or reimbursements are considered earned income. Amendment taxes Noncash income. Amendment taxes   The fair market value of property or facilities provided to you by your employer in the form of lodging, meals, or use of a car is earned income. Amendment taxes Allowances or reimbursements. Amendment taxes   Earned income includes allowances or reimbursements you receive, such as the following amounts. Amendment taxes    Cost-of-living allowances. Amendment taxes Overseas differential. Amendment taxes Family allowance. Amendment taxes Reimbursement for education or education allowance. Amendment taxes Home leave allowance. Amendment taxes Quarters allowance. Amendment taxes Reimbursement for moving or moving allowance (unless excluded from income as discussed later in Reimbursement of employee expenses under Earned and Unearned Income). Amendment taxes Source of Earned Income The source of your earned income is the place where you perform the services for which you received the income. Amendment taxes Foreign earned income is income you receive for working in a foreign country. Amendment taxes Where or how you are paid has no effect on the source of the income. Amendment taxes For example, income you receive for work done in Austria is income from a foreign source even if the income is paid directly to your bank account in the United States and your employer is located in New York City. Amendment taxes Example. Amendment taxes You are a U. Amendment taxes S. Amendment taxes citizen, a bona fide resident of Canada, and working as a mining engineer. Amendment taxes Your salary is $76,800 per year. Amendment taxes You also receive a $6,000 cost-of-living allowance, and a $6,000 education allowance. Amendment taxes Your employment contract did not indicate that you were entitled to these allowances only while outside the United States. Amendment taxes Your total income is $88,800. Amendment taxes You work a 5-day week, Monday through Friday. Amendment taxes After subtracting your vacation, you have a total of 240 workdays in the year. Amendment taxes You worked in the United States during the year for 6 weeks (30 workdays). Amendment taxes The following shows how to figure the part of your income that is for work done in Canada during the year. Amendment taxes   Number of days worked in Canada during the year (210) × Total income ($88,800) = $77,700     Number of days of work during the year for which payment was made (240)   Your foreign source earned income is $77,700. Amendment taxes Earned and Unearned Income Earned income was defined earlier as pay for personal services performed. Amendment taxes Some types of income are not easily identified as earned or unearned income. Amendment taxes Some of these types of income are further explained here. Amendment taxes Income from a sole proprietorship or partnership. Amendment taxes   Income from a business in which capital investment is an important part of producing the income may be unearned income. Amendment taxes If you are a sole proprietor or partner and your personal services are also an important part of producing the income, the part of the income that represents the value of your personal services will be treated as earned income. Amendment taxes Capital a factor. Amendment taxes   If capital investment is an important part of producing income, no more than 30% of your share of the net profits of the business is earned income. Amendment taxes   If you have no net profits, the part of your gross profit that represents a reasonable allowance for personal services actually performed is considered earned income. Amendment taxes Because you do not have a net profit, the 30% limit does not apply. Amendment taxes Example 1. Amendment taxes You are a U. Amendment taxes S. Amendment taxes citizen and meet the bona fide residence test. Amendment taxes You invest in a partnership based in Cameroon that is engaged solely in selling merchandise outside the United States. Amendment taxes You perform no services for the partnership. Amendment taxes At the end of the tax year, your share of the net profits is $80,000. Amendment taxes The entire $80,000 is unearned income. Amendment taxes Example 2. Amendment taxes Assume that in Example 1 you spend time operating the business. Amendment taxes Your share of the net profits is $80,000; 30% of your share of the profits is $24,000. Amendment taxes If the value of your services for the year is $15,000, your earned income is limited to the value of your services, $15,000. Amendment taxes Capital not a factor. Amendment taxes   If capital is not an income-producing factor and personal services produce the business income, the 30% rule does not apply. Amendment taxes The entire amount of business income is earned income. Amendment taxes Example. Amendment taxes You and Lou Green are management consultants and operate as equal partners in performing services outside the United States. Amendment taxes Because capital is not an income- producing factor, all the income from the partnership is considered earned income. Amendment taxes Income from a corporation. Amendment taxes   The salary you receive from a corporation is earned income only if it represents a reasonable allowance as compensation for work you do for the corporation. Amendment taxes Any amount over what is considered a reasonable salary is unearned income. Amendment taxes Example 1. Amendment taxes You are a U. Amendment taxes S. Amendment taxes citizen and an officer and stockholder of a corporation in Honduras. Amendment taxes You perform no work or service of any kind for the corporation. Amendment taxes During the tax year you receive a $10,000 “salary” from the corporation. Amendment taxes The $10,000 clearly is not for personal services and is unearned income. Amendment taxes Example 2. Amendment taxes You are a U. Amendment taxes S. Amendment taxes citizen and work full time as secretary-treasurer of your corporation. Amendment taxes During the tax year you receive $100,000 as salary from the corporation. Amendment taxes If $80,000 is a reasonable allowance as pay for the work you did, then $80,000 is earned income. Amendment taxes Stock options. Amendment taxes   You may have earned income if you disposed of stock that you got by exercising a stock option granted to you under an employee stock purchase plan. Amendment taxes   If your gain on the disposition of stock you got by exercising an option is treated as capital gain, your gain is unearned income. Amendment taxes   However, if you disposed of the stock less than 2 years after you were granted the option or less than 1 year after you got the stock, part of the gain on the disposition may be earned income. Amendment taxes It is considered received in the year you disposed of the stock and earned in the year you performed the services for which you were granted the option. Amendment taxes Any part of the earned income that is due to work you did outside the United States is foreign earned income. Amendment taxes   See Publication 525, Taxable and Nontaxable Income, for a discussion of the treatment of stock options. Amendment taxes Pensions and annuities. Amendment taxes    For purposes of the foreign earned income exclusion, the foreign housing exclusion, and the foreign housing deduction, amounts received as pensions or annuities are unearned income. Amendment taxes Royalties. Amendment taxes   Royalties from the leasing of oil and mineral lands and patents generally are a form of rent or dividends and are unearned income. Amendment taxes   Royalties received by a writer are earned income if they are received: For the transfer of property rights of the writer in the writer's product, or Under a contract to write a book or series of articles. Amendment taxes Rental income. Amendment taxes   Generally, rental income is unearned income. Amendment taxes If you perform personal services in connection with the production of rent, up to 30% of your net rental income can be considered earned income. Amendment taxes Example. Amendment taxes Larry Smith, a U. Amendment taxes S. Amendment taxes citizen living in Australia, owns and operates a rooming house in Sydney. Amendment taxes If he is operating the rooming house as a business that requires capital and personal services, he can consider up to 30% of net rental income as earned income. Amendment taxes On the other hand, if he just owns the rooming house and performs no personal services connected with its operation, except perhaps making minor repairs and collecting rents, none of his net income from the house is considered earned income. Amendment taxes It is all unearned income. Amendment taxes Professional fees. Amendment taxes   If you are engaged in a professional occupation (such as a doctor or lawyer), all fees received in the performance of these services are earned income. Amendment taxes Income of an artist. Amendment taxes   Income you receive from the sale of paintings you created is earned income. Amendment taxes Scholarships and fellowships. Amendment taxes   Any portion of a scholarship or fellowship grant that is paid to you for teaching, research or other services is considered earned income if you must include it in your gross income. Amendment taxes If the payer of the grant is required to provide you with a Form W-2, Wage and Tax Statement, these amounts will be listed as wages. Amendment taxes    Certain scholarship and fellowship income may be exempt under other provisions. Amendment taxes See Publication 970, Tax Benefits for Education, chapter 1. Amendment taxes Use of employer's property or facilities. Amendment taxes   If you receive fringe benefits in the form of the right to use your employer's property or facilities, the fair market value of that right is earned income. Amendment taxes Fair market value is the price at which the property would change hands between a willing buyer and a willing seller, neither being required to buy or sell, and both having reasonable knowledge of all the necessary facts. Amendment taxes Example. Amendment taxes You are privately employed and live in Japan all year. Amendment taxes You are paid a salary of $6,000 a month. Amendment taxes You live rent-free in a house provided by your employer that has a fair rental value of $3,000 a month. Amendment taxes The house is not provided for your employer's convenience. Amendment taxes You report on the calendar-year, cash basis. Amendment taxes You received $72,000 salary from foreign sources plus $36,000 fair rental value of the house, or a total of $108,000 of earned income. Amendment taxes Reimbursement of employee expenses. Amendment taxes   If you are reimbursed under an accountable plan (defined below) for expenses you incur on your employer's behalf and you have adequately accounted to your employer for the expenses, do not include the reimbursement for those expenses in your earned income. Amendment taxes   The expenses for which you are reimbursed are not considered allocable (related) to your earned income. Amendment taxes If expenses and reimbursement are equal, there is nothing to allocate to excluded income. Amendment taxes If expenses are more than the reimbursement, the unreimbursed expenses are considered to have been incurred in producing earned income and must be divided between your excluded and included income in determining the amount of unreimbursed expenses you can deduct. Amendment taxes (See chapter 5. Amendment taxes ) If the reimbursement is more than the expenses, no expenses remain to be divided between excluded and included income and the excess reimbursement must be included in earned income. Amendment taxes   These rules do not apply to the following individuals. Amendment taxes Straight-commission salespersons. Amendment taxes Employees who have arrangements with their employers under which taxes are not withheld on a percentage of the commissions because the employers consider that percentage to be attributable to the employees' expenses. Amendment taxes Accountable plan. Amendment taxes   An accountable plan is a reimbursement or allowance arrangement that includes all three of the following rules. Amendment taxes The expenses covered under the plan must have a business connection. Amendment taxes The employee must adequately account to the employer for these expenses within a reasonable period of time. Amendment taxes The employee must return any excess reimbursement or allowance within a reasonable period of time. Amendment taxes Reimbursement of moving expenses. Amendment taxes   Reimbursement of moving expenses may be earned income. Amendment taxes You must include as earned income: Any reimbursements of, or payments for, nondeductible moving expenses, Reimbursements that are more than your deductible expenses and that you do not return to your employer, Any reimbursements made (or treated as made) under a nonaccountable plan (any plan that does not meet the rules listed above for an accountable plan), even if they are for deductible expenses, and Any reimbursement of moving expenses you deducted in an earlier year. Amendment taxes This section discusses reimbursements that must be included in earned income. Amendment taxes Publication 521, Moving Expenses, discusses additional rules that apply to moving expense deductions and reimbursements. Amendment taxes   The rules for determining when the reimbursement is considered earned or where the reimbursement is considered earned may differ somewhat from the general rules previously discussed. Amendment taxes   Although you receive the reimbursement in one tax year, it may be considered earned for services performed, or to be performed, in another tax year. Amendment taxes You must report the reimbursement as income on your return in the year you receive it, even if it is considered earned during a different year. Amendment taxes Move from U. Amendment taxes S. Amendment taxes to foreign country. Amendment taxes   If you move from the United States to a foreign country, your moving expense reimbursement is generally considered pay for future services to be performed at the new location. Amendment taxes The reimbursement is considered earned solely in the year of the move if you qualify for the exclusion for a period that includes at least 120 days during that tax year. Amendment taxes   If you are neither a bona fide resident of nor physically present in a foreign country or countries for a period that includes 120 days during the year of the move, a portion of the reimbursement is considered earned in the year of the move and a portion is considered earned in the year following the year of the move. Amendment taxes To figure the amount earned in the year of the move, multiply the reimbursement by a fraction. Amendment taxes The numerator (top number) is the number of days in your qualifying period that fall within the year of the move, and the denominator (bottom number) is the total number of days in the year of the move. Amendment taxes   The difference between the total reimbursement and the amount considered earned in the year of the move is the amount considered earned in the year following the year of the move. Amendment taxes The part earned in each year is figured as shown in the following example. Amendment taxes Example. Amendment taxes You are a U. Amendment taxes S. Amendment taxes citizen working in the United States. Amendment taxes You were told in October 2012 that you were being transferred to a foreign country. Amendment taxes You arrived in the foreign country on December 15, 2012, and you are a bona fide resident for the remainder of 2012 and all of 2013. Amendment taxes Your employer reimbursed you $2,000 in January 2013 for the part of the moving expense that you were not allowed to deduct. Amendment taxes Because you did not qualify for the exclusion under the bona fide residence test for at least 120 days in 2012 (the year of the move), the reimbursement is considered pay for services performed in the foreign country for both 2012 and 2013. Amendment taxes You figure the part of the reimbursement for services performed in the foreign country in 2012 by multiplying the total reimbursement by a fraction. Amendment taxes The fraction is the number of days during which you were a bona fide resident in 2012 (the year of the move) divided by 366. Amendment taxes The remaining part of the reimbursement is for services performed in the foreign country in 2013. Amendment taxes This computation is used only to determine when the reimbursement is considered earned. Amendment taxes You would include the amount of the reimbursement in income in 2013, the year you received it. Amendment taxes Move between foreign countries. Amendment taxes   If you move between foreign countries, any moving expense reimbursement that you must include in income will be considered earned in the year of the move if you qualify for the foreign earned income exclusion for a period that includes at least 120 days in the year of the move. Amendment taxes Move to U. Amendment taxes S. Amendment taxes   If you move to the United States, the moving expense reimbursement that you must include in income is generally considered to be U. Amendment taxes S. Amendment taxes source income. Amendment taxes   However, if under either an agreement between you and your employer or a statement of company policy that is reduced to writing before your move to the foreign country, your employer will reimburse you for your move back to the United States regardless of whether you continue to work for the employer, the includible reimbursement is considered compensation for past services performed in the foreign country. Amendment taxes The includible reimbursement is considered earned in the year of the move if you qualify for the foreign earned income exclusion for a period that includes at least 120 days during that year. Amendment taxes Otherwise, you treat the includible reimbursement as received for services performed in the foreign country in the year of the move and the year immediately before the year of the move. Amendment taxes   See the discussion under Move from U. Amendment taxes S. Amendment taxes to foreign country , earlier, to figure the amount of the includible reimbursement considered earned in the year of the move. Amendment taxes The amount earned in the year before the year of the move is the difference between the total includible reimbursement and the amount earned in the year of the move. Amendment taxes Example. Amendment taxes You are a U. Amendment taxes S. Amendment taxes citizen employed in a foreign country. Amendment taxes You retired from employment with your employer on March 31, 2013, and returned to the United States after having been a bona fide resident of the foreign country for several years. Amendment taxes A written agreement with your employer entered into before you went abroad provided that you would be reimbursed for your move back to the United States. Amendment taxes In April 2013, your former employer reimbursed you $4,000 for the part of the cost of your move back to the United States that you were not allowed to deduct. Amendment taxes Because you were not a bona fide resident of a foreign country or countries for a period that included at least 120 days in 2013 (the year of the move), the includible reimbursement is considered pay for services performed in the foreign country for both 2013 and 2012. Amendment taxes You figure the part of the moving expense reimbursement for services performed in the foreign country for 2013 by multiplying the total includible reimbursement by a fraction. Amendment taxes The fraction is the number of days of foreign residence during the year (90) divided by the number of days in the year (365). Amendment taxes The remaining part of the includible reimbursement is for services performed in the foreign country in 2012. Amendment taxes You report the amount of the includible reimbursement in 2013, the year you received it. Amendment taxes    In this example, if you met the physical presence test for a period that included at least 120 days in 2013, the moving expense reimbursement would be considered earned entirely in the year of the move. Amendment taxes Storage expense reimbursements. Amendment taxes   If you are reimbursed for storage expenses, the reimbursement is for services you perform during the period of time for which the storage expenses are incurred. Amendment taxes U. Amendment taxes S. Amendment taxes Government Employees For purposes of the foreign earned income exclusion, the foreign housing exclusion, and the foreign housing deduction, foreign earned income does not include any amounts paid by the United States or any of its agencies to its employees. Amendment taxes This includes amounts paid from both appropriated and nonappropriated funds. Amendment taxes The following organizations (and other organizations similarly organized and operated under United States Army, Navy, or Air Force regulations) are integral parts of the Armed Forces, agencies, or instrumentalities of the United States. Amendment taxes United States Armed Forces exchanges. Amendment taxes Commissioned and noncommissioned officers' messes. Amendment taxes Armed Forces motion picture services. Amendment taxes Kindergartens on foreign Armed Forces installations. Amendment taxes Amounts paid by the United States or its agencies to persons who are not their employees may qualify for exclusion or deduction. Amendment taxes If you are a U. Amendment taxes S. Amendment taxes Government employee paid by a U. Amendment taxes S. Amendment taxes agency that assigned you to a foreign government to perform specific services for which the agency is reimbursed by the foreign government, your pay is from the U. Amendment taxes S. Amendment taxes Government and does not qualify for exclusion or deduction. Amendment taxes If you have questions about whether you are an employee or an independent contractor, get Publication 15-A, Employer's Supplemental Tax Guide. Amendment taxes American Institute in Taiwan. Amendment taxes   Amounts paid by the American Institute in Taiwan are not foreign earned income for purposes of the foreign earned income exclusion, the foreign housing exclusion, or the foreign housing deduction. Amendment taxes If you are an employee of the American Institute in Taiwan, allowances you receive are exempt from U. Amendment taxes S. Amendment taxes tax up to the amount that equals tax-exempt allowances received by civilian employees of the U. Amendment taxes S. Amendment taxes Government. Amendment taxes Allowances. Amendment taxes   Cost-of-living and foreign-area allowances paid under certain acts of Congress to U. Amendment taxes S. Amendment taxes civilian officers and employees stationed in Alaska and Hawaii or elsewhere outside the 48 contiguous states and the District of Columbia can be excluded from gross income. Amendment taxes Post differentials are wages that must be included in gross income, regardless of the act of Congress under which they are paid. Amendment taxes More information. Amendment taxes   Publication 516, U. Amendment taxes S. Amendment taxes Government Civilian Employees Stationed Abroad, has more information for U. Amendment taxes S. Amendment taxes Government employees abroad. Amendment taxes Exclusion of Meals and Lodging You do not include in your income the value of meals and lodging provided to you and your family by your employer at no charge if the following conditions are met. Amendment taxes The meals are furnished: On the business premises of your employer, and For the convenience of your employer. Amendment taxes The lodging is furnished: On the business premises of your employer, For the convenience of your employer, and As a condition of your employment. Amendment taxes If these conditions are met, do not include the value of the meals or lodging in your income, even if a law or your employment contract says that they are provided as compensation. Amendment taxes Amounts you do not include in income because of these rules are not foreign earned income. Amendment taxes If you receive a Form W-2, excludable amounts should not be included in the total reported in box 1 as wages. Amendment taxes Family. Amendment taxes   Your family, for this purpose, includes only your spouse and your dependents. Amendment taxes Lodging. Amendment taxes   The value of lodging includes the cost of heat, electricity, gas, water, sewer service, and similar items needed to make the lodging fit to live in. Amendment taxes Business premises of employer. Amendment taxes   Generally, the business premises of your employer is wherever you work. Amendment taxes For example, if you work as a housekeeper, meals and lodging provided in your employer's home are provided on the business premises of your employer. Amendment taxes Similarly, meals provided to cowhands while herding cattle on land leased or owned by their employer are considered provided on the premises of their employer. Amendment taxes Convenience of employer. Amendment taxes   Whether meals or lodging are provided for your employer's convenience must be determined from all the facts and circumstances. Amendment taxes Meals furnished at no charge are considered provided for your employer's convenience if there is a good business reason for providing them, other than to give you more pay. Amendment taxes   On the other hand, if your employer provides meals to you or your family as a means of giving you more pay, and there is no other business reason for providing them, their value is extra income to you because they are not furnished for the convenience of your employer. Amendment taxes Condition of employment. Amendment taxes   Lodging is provided as a condition of employment if you must accept the lodging to properly carry out the duties of your job. Amendment taxes You must accept lodging to properly carry out your duties if, for example, you must be available for duty at all times or you could not perform your duties if the lodging was not furnished. Amendment taxes Foreign camps. Amendment taxes   If the lodging is in a camp located in a foreign country, the camp is considered part of your employer's business premises. Amendment taxes The camp must be: Provided for your employer's convenience because the place where you work is in a remote area where satisfactory housing is not available to you on the open market within a reasonable commuting distance, Located as close as reasonably possible in the area where you work, and Provided in a common area or enclave that is not available to the general public for lodging or accommodations and that normally houses at least ten employees. Amendment taxes Foreign Earned Income Exclusion If your tax home is in a foreign country and you meet the bona fide residence test or the physical presence test, you can choose to exclude from your income a limited amount of your foreign earned income. Amendment taxes Foreign earned income was defined earlier in this chapter. Amendment taxes You also can choose to exclude from your income a foreign housing amount. Amendment taxes This is explained later under Foreign Housing Exclusion. Amendment taxes If you choose to exclude a foreign housing amount, you must figure the foreign housing exclusion before you figure the foreign earned income exclusion. Amendment taxes Your foreign earned income exclusion is limited to your foreign earned income minus your foreign housing exclusion. Amendment taxes If you choose to exclude foreign earned income, you cannot deduct, exclude, or claim a credit for any item that can be allocated to or charged against the excluded amounts. Amendment taxes This includes any expenses, losses, and other normally deductible items allocable to the excluded income. Amendment taxes For more information about deductions and credits, see chapter 5 . Amendment taxes Limit on Excludable Amount You may be able to exclude up to $97,600 of your foreign earned income in 2013. Amendment taxes You cannot exclude more than the smaller of: $97,600, or Your foreign earned income (discussed earlier) for the tax year minus your foreign housing exclusion (discussed later). Amendment taxes If both you and your spouse work abroad and each of you meets either the bona fide residence test or the physical presence test, you can each choose the foreign earned income exclusion. Amendment taxes You do not both need to meet the same test. Amendment taxes Together, you and your spouse can exclude as much as $195,200. Amendment taxes Paid in year following work. Amendment taxes   Generally, you are considered to have earned income in the year in which you do the work for which you receive the income, even if you work in one year but are not paid until the following year. Amendment taxes If you report your income on a cash basis, you report the income on your return for the year you receive it. Amendment taxes If you work one year, but are not paid for that work until the next year, the amount you can exclude in the year you are paid is the amount you could have excluded in the year you did the work if you had been paid in that year. Amendment taxes For an exception to this general rule, see Year-end payroll period, later. Amendment taxes Example. Amendment taxes You were a bona fide resident of Brazil for all of 2012 and 2013. Amendment taxes You report your income on the cash basis. Amendment taxes In 2012, you were paid $84,200 for work you did in Brazil during that year. Amendment taxes You excluded all of the $84,200 from your income in 2012. Amendment taxes In 2013, you were paid $117,300 for your work in Brazil. Amendment taxes $18,800 was for work you did in 2012 and $98,500 was for work you did in 2013. Amendment taxes You can exclude $10,900 of the $18,800 from your income in 2013. Amendment taxes This is the $95,100 maximum exclusion in 2012 minus the $84,200 actually excluded that year. Amendment taxes You must include the remaining $7,900 in income in 2013 because you could not have excluded that income in 2012 if you had received it that year. Amendment taxes You can exclude $97,600 of the $98,500 you were paid for work you did in 2013 from your 2013 income. Amendment taxes Your total foreign earned income exclusion for 2013 is $108,500 ($10,900 for work you did in 2012 and $97,600 for work you did in 2013). Amendment taxes You would include in your 2013 income $8,800 ($7,900 for the work you did in 2012 and $900 for the work you did in 2013). Amendment taxes Year-end payroll period. Amendment taxes   There is an exception to the general rule that income is considered earned in the year you do the work for which you receive the income. Amendment taxes If you are a cash-basis taxpayer, any salary or wage payment you receive after the end of the year in which you do the work for which you receive the pay is considered earned entirely in the year you receive it if all four of the following apply. Amendment taxes The period for which the payment is made is a normal payroll period of your employer that regularly applies to you. Amendment taxes The payroll period includes the last day of your tax year (December 31 if you figure your taxes on a calendar-year basis). Amendment taxes The payroll period is not longer than 16 days. Amendment taxes The payday comes at the same time in relation to the payroll period that it would normally come and it comes before the end of the next payroll period. Amendment taxes Example. Amendment taxes You are paid twice a month. Amendment taxes For the normal payroll period that begins on the first of the month and ends on the fifteenth of the month, you are paid on the sixteenth day of the month. Amendment taxes For the normal payroll period that begins on the sixteenth of the month and ends on the last day of the month, you are paid on the first day of the following month. Amendment taxes Because all of the above conditions are met, the pay you received on January 1, 2013, is considered earned in 2013. Amendment taxes Income earned over more than 1 year. Amendment taxes   Regardless of when you actually receive income, you must apply it to the year in which you earned it in figuring your excludable amount for that year. Amendment taxes For example, a bonus may be based on work you did over several years. Amendment taxes You determine the amount of the bonus that is considered earned in a particular year in two steps. Amendment taxes Divide the bonus by the number of calendar months in the period when you did the work that resulted in the bonus. Amendment taxes Multiply the result of (1) by the number of months you did the work during the year. Amendment taxes This is the amount that is subject to the exclusion limit for that tax year. Amendment taxes Income received more than 1 year after it was earned. Amendment taxes   You cannot exclude income you receive after the end of the year following the year you do the work to earn it. Amendment taxes Example. Amendment taxes   You were a bona fide resident of Sweden for 2011, 2012, and 2013. Amendment taxes You report your income on the cash basis. Amendment taxes In 2011, you were paid $69,000 for work you did in Sweden that year and in 2012 you were paid $74,000 for that year's work in Sweden. Amendment taxes You excluded all the income on your 2011 and 2012 returns. Amendment taxes   In 2013, you were paid $92,000; $82,000 for your work in Sweden during 2013, and $10,000 for work you did in Sweden in 2011. Amendment taxes You cannot exclude any of the $10,000 for work done in 2011 because you received it after the end of the year following the year in which you earned it. Amendment taxes You must include the $10,000 in income. Amendment taxes You can exclude all of the $82,000 received for work you did in 2013. Amendment taxes Community income. Amendment taxes   The maximum exclusion applies separately to the earnings of spouses. Amendment taxes Ignore any community property laws when you figure your limit on the foreign earned income exclusion. Amendment taxes Part-year exclusion. Amendment taxes   If the period for which you qualify for the foreign earned income exclusion includes only part of the year, you must adjust the maximum limit based on the number of qualifying days in the year. Amendment taxes The number of qualifying days is the number of days in the year within the period on which you both: Have your tax home in a foreign country, and Meet either the bona fide residence test or the physical presence test. Amendment taxes   For this purpose, you can count as qualifying days all days within a period of 12 consecutive months once you are physically present and have your tax home in a foreign country for 330 full days. Amendment taxes To figure your maximum exclusion, multiply the maximum excludable amount for the year by the number of your qualifying days in the year, and then divide the result by the number of days in the year. Amendment taxes Example. Amendment taxes You report your income on the calendar-year basis and you qualified for the foreign earned income exclusion under the bona fide residence test for 75 days in 2013. Amendment taxes You can exclude a maximum of 75/365 of $97,600, or $20,055, of your foreign earned income for 2013. Amendment taxes If you qualify under the bona fide residence test for all of 2014, you can exclude your foreign earned income up to the 2014 limit. Amendment taxes Physical presence test. Amendment taxes   Under the physical presence test, a 12-month period can be any period of 12 consecutive months that includes 330 full days. Amendment taxes If you qualify for the foreign earned income exclusion under the physical presence test for part of a year, it is important to carefully choose the 12-month period that will allow the maximum exclusion for that year. Amendment taxes Example. Amendment taxes You are physically present and have your tax home in a foreign country for a 16-month period from June 1, 2012, through September 30, 2013, except for 16 days in December 2012 when you were on vacation in the United States. Amendment taxes You figure the maximum exclusion for 2012 as follows. Amendment taxes Beginning with June 1, 2012, count forward 330 full days. Amendment taxes Do not count the 16 days you spent in the United States. Amendment taxes The 330th day, May 12, 2013, is the last day of a 12-month period. Amendment taxes Count backward 12 months from May 11, 2013, to find the first day of this 12-month period, May 12, 2012. Amendment taxes This 12-month period runs from May 12, 2012, through May 11, 2013. Amendment taxes Count the total days during 2012 that fall within this 12-month period. Amendment taxes This is 234 days (May 12, 2012 – December 31, 2012). Amendment taxes Multiply $95,100 (the maximum exclusion for 2012) by the fraction 234/366 to find your maximum exclusion for 2012 ($60,802). Amendment taxes You figure the maximum exclusion for 2013 in the opposite manner. Amendment taxes Beginning with your last full day, September 30, 2013, count backward 330 full days. Amendment taxes Do not count the 16 days you spent in the United States. Amendment taxes That day, October 20, 2012, is the first day of a 12-month period. Amendment taxes Count forward 12 months from October 20, 2012, to find the last day of this 12-month period, October 19, 2013. Amendment taxes This 12-month period runs from October 20, 2012, through October 19, 2013. Amendment taxes Count the total days during 2013 that fall within this 12-month period. Amendment taxes This is 292 days (January 1, 2013 – October 19, 2013). Amendment taxes Multiply $97,600, the maximum limit, by the fraction 292/365 to find your maximum exclusion for 2013 ($78,080). Amendment taxes Choosing the Exclusion The foreign earned income exclusion is voluntary. Amendment taxes You can choose the exclusion by completing the appropriate parts of Form 2555. Amendment taxes When You Can Choose the Exclusion Your initial choice of the exclusion on Form 2555 or Form 2555-EZ generally must be made with one of the following returns. Amendment taxes A return filed by the due date (including any extensions). Amendment taxes A return amending a timely-filed return. Amendment taxes Amended returns generally must be filed by the later of 3 years after the filing date of the original return or 2 years after the tax is paid. Amendment taxes A return filed within 1 year from the original due date of the return (determined without regard to any extensions). Amendment taxes Filing after the above periods. Amendment taxes   You can choose the exclusion on a return filed after the periods described above if you owe no federal income tax after taking into account the exclusion. Amendment taxes If you owe federal income tax after taking into account the exclusion, you can choose the exclusion on a return filed after the periods described earlier if you file before the IRS discovers that you failed to choose the exclusion. Amendment taxes Whether or not you owe federal income tax after taking the exclusion into account, if you file your return after the periods described earlier, you must type or legibly print at the top of the first page of the Form 1040 “Filed pursuant to section 1. Amendment taxes 911-7(a)(2)(i)(D). Amendment taxes ” If you owe federal income tax after taking into account the foreign earned income exclusion and the IRS discovered that you failed to choose the exclusion, you may still be able to choose the exclusion. Amendment taxes You must request a private letter ruling under Income Tax Regulation 301. Amendment taxes 9100-3 and Revenue Procedure 2013-1, 2013-1 I. Amendment taxes R. Amendment taxes B. Amendment taxes 1, available at www. Amendment taxes irs. Amendment taxes gov/irb/2013-01_IRB/ar06. Amendment taxes html. Amendment taxes Effect of Choosing the Exclusion Once you choose to exclude your foreign earned income, that choice remains in effect for that year and all later years unless you revoke it. Amendment taxes Foreign tax credit or deduction. Amendment taxes