Filing Your Taxes Online is Fast, Easy and Secure.
Start now and receive your tax refund in as little as 7 days.

1. Get Answers

Your online questions are customized to your unique tax situation.

2. Maximize your Refund

Find tax credits for everything from school tuition to buying a hybri

3. E-File for FREE

E-file free with direct deposit to get your refund in as few as 7 days.

Filing your taxes with paper mail can be difficult and it could take weeks for your refund to arrive. IRS e-file is easy, fast and secure. There is no paperwork going to the IRS so tax refunds can be processed in as little as 7 days with direct deposit. As you prepare your taxes online, you can see your tax refund in real time.

FREE audit support and representation from an enrolled agent – NEW and only from H&R Block

Free State File Taxes

Free 2005 Tax FilingTurbotax Military Members1040ez Booklet OnlineH & R Block Free Tax FilingFree State Income Tax Forms2009 Tax Form 1040Irs Federal Tax Tables 2011How To File 2011 Taxes Online For FreeWhere Can I File My 2011 Taxes For Free2012 Income Tax BookletWhen Can I File An Amended Tax Return For 2012How Do I File My Taxes From 2012Free Irs Tax Filing OnlineAmending Tax ReturnsHow To Do A Tax AmendmentFile Tax ReturnState Income TaxesE File 2012 Taxes FreeFederal Tax Form 2010Free File Federal And State Taxes OnlineFree Federal Tax Filing 2011Irs Gov Free FileState Tax E FileFree Electronic Tax FilingFile 2011 Taxes LateCan I File Previous Years Taxes OnlineFree Tax Preparation For MilitaryI Filed My Taxes WrongWww Myfreetaxes Com SpringfieldmoIrs 1040x FormForm 1040 Ez 2012State Tax BookletIrs Amended Return Form2012 State Tax FormsFree Websites To File State TaxesIrs Tax Form 1040ezState Tax Forms 2012Amending Taxes1040nr Ez Online FilingDo I Have To File A State Tax Return

Free State File Taxes

Free state file taxes Publication 514 - Additional Material Prev  Up  Next   Home   More Online Publications
Print - Click this link to Print this page

Where to File Paper Tax Returns - With or Without a Payment

Where to File Tax Returns - Addresses Listed by Return Type
Where to file addresses listed by return type for use during calendar year 2013.

Where to File Certain Elections, Statements, Returns and Other Documents
This page provides up-to-date information on filing addresses for certain elections, statements, returns and other documents required by the Code of Federal Regulations (CFR) Title 26

Where to Send Non-Return Forms (Applications and Payments)
Where to send certain payments and applications other than tax returns. This page provides a quick guide for where to send certain non-return forms, applications, and payments.

Where to File - Tax Exempt and Government Entities
Where to file addresses for tax exempt and government entities.

Private Delivery Services (PDS)
Use these addresses ONLY IF you are using a private delivery service to send your returns to IRS. If you are not using a private delivery service, use the links above to find the correct mailing address to mail your return.

Page Last Reviewed or Updated: 13-Feb-2014

The Free State File Taxes

Free state file taxes 4. Free state file 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. Free state file taxes S. Free state file 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. Free state file taxes Useful Items - You may want to see: Publication 519 U. Free state file taxes S. Free state file taxes Tax Guide for Aliens 570 Tax Guide for Individuals With Income from U. Free state file taxes S. Free state file taxes Possessions 596 Earned Income Credit (EIC) Form (and Instructions) 1040X Amended U. Free state file taxes S. Free state file 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. Free state file 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. Free state file taxes If you are a U. Free state file taxes S. Free state file taxes citizen or a resident alien of the United States and you live abroad, you are taxed on your worldwide income. Free state file taxes However, you may qualify to exclude from income up to $97,600 of your foreign earnings. Free state file taxes In addition, you can exclude or deduct certain foreign housing amounts. Free state file taxes See Foreign Earned Income Exclusion and Foreign Housing Exclusion and Deduction, later. Free state file taxes You also may be entitled to exclude from income the value of meals and lodging provided to you by your employer. Free state file taxes See Exclusion of Meals and Lodging, later. Free state file 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. Free state file taxes Your tax home must be in a foreign country. Free state file taxes You must have foreign earned income. Free state file taxes You must be one of the following. Free state file taxes A U. Free state file taxes S. Free state file taxes citizen who is a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year. Free state file taxes A U. Free state file taxes S. Free state file 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. Free state file taxes A U. Free state file taxes S. Free state file taxes citizen or a U. Free state file taxes S. Free state file 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. Free state file taxes See Publication 519 to find out if you are a U. Free state file taxes S. Free state file taxes resident alien for tax purposes and whether you keep that alien status when you temporarily work abroad. Free state file taxes If you are a nonresident alien married to a U. Free state file taxes S. Free state file 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. Free state file taxes For information on making the choice, see the discussion in chapter 1 under Nonresident Alien Spouse Treated as a Resident . Free state file taxes Waiver of minimum time requirements. Free state file 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. Free state file taxes This is fully explained under Waiver of Time Requirements , later. Free state file taxes   See Figure 4-A and information in this chapter to determine if you are eligible to claim either exclusion or the deduction. Free state file 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. Free state file taxes Bona fide residence and physical presence are explained later. Free state file 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. Free state file taxes Your tax home is the place where you are permanently or indefinitely engaged to work as an employee or self-employed individual. Free state file 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. Free state file 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. Free state file 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. Free state file 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. Free state file taxes However, your abode is not necessarily in the United States while you are temporarily in the United States. Free state file 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. Free state file taxes “Abode” has been variously defined as one's home, habitation, residence, domicile, or place of dwelling. Free state file taxes It does not mean your principal place of business. Free state file taxes “Abode” has a domestic rather than a vocational meaning and does not mean the same as “tax home. Free state file taxes ” The location of your abode often will depend on where you maintain your economic, family, and personal ties. Free state file taxes Example 1. Free state file 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. Free state file taxes You return to your family residence in the United States during your off periods. Free state file taxes You are considered to have an abode in the United States and do not satisfy the tax home test in the foreign country. Free state file taxes You cannot claim either of the exclusions or the housing deduction. Free state file taxes Example 2. Free state file taxes For several years, you were a marketing executive with a producer of machine tools in Toledo, Ohio. Free state file 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. Free state file taxes Before you left, you distributed business cards showing your business and home addresses in London. Free state file taxes You kept ownership of your home in Toledo but rented it to another family. Free state file taxes You placed your car in storage. Free state file 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. Free state file taxes Shortly after moving, you leased a car and you and your spouse got British driving licenses. Free state file taxes Your entire family got library cards for the local public library. Free state file taxes You and your spouse opened bank accounts with a London bank and secured consumer credit. Free state file 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. Free state file taxes Your abode is in London for the time you live there. Free state file taxes You satisfy the tax home test in the foreign country. Free state file taxes Please click here for the text description of the image. Free state file 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. Free state file 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. Free state file 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. Free state file 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. Free state file 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. Free state file taxes If you expect it to last for more than 1 year, it is indefinite. Free state file 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. Free state file taxes Once your expectation changes, it is indefinite. Free state file 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. Free state file taxes A foreign country includes any territory under the sovereignty of a government other than that of the United States. Free state file taxes The term “foreign country” includes the country's airspace and territorial waters, but not international waters and the airspace above them. Free state file 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. Free state file taxes The term “foreign country” does not include Antarctica or U. Free state file taxes S. Free state file taxes possessions such as Puerto Rico, Guam, the Commonwealth of the Northern Mariana Islands, the U. Free state file taxes S. Free state file taxes Virgin Islands, and Johnston Island. Free state file 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. Free state file taxes American Samoa, Guam, and the Commonwealth of the Northern Mariana Islands Residence or presence in a U. Free state file taxes S. Free state file taxes possession does not qualify you for the foreign earned income exclusion. Free state file taxes You may, however, qualify for an exclusion of your possession income on your U. Free state file taxes S. Free state file taxes return. Free state file taxes American Samoa. Free state file taxes   There is a possession exclusion available to individuals who are bona fide residents of American Samoa for the entire tax year. Free state file taxes Gross income from sources within American Samoa may be eligible for this exclusion. Free state file taxes Income that is effectively connected with the conduct of a trade or business within American Samoa also may be eligible for this exclusion. Free state file taxes Use Form 4563, Exclusion of Income for Bona Fide Residents of American Samoa, to figure the exclusion. Free state file taxes Guam and the Commonwealth of the Northern Mariana Islands. Free state file 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. Free state file taxes   For more information, see Publication 570. Free state file taxes Puerto Rico and U. Free state file taxes S. Free state file taxes Virgin Islands Residents of Puerto Rico and the U. Free state file taxes S. Free state file taxes Virgin Islands cannot claim the foreign earned income exclusion or the foreign housing exclusion. Free state file taxes Puerto Rico. Free state file taxes   Generally, if you are a U. Free state file taxes S. Free state file taxes citizen who is a bona fide resident of Puerto Rico for the entire tax year, you are not subject to U. Free state file taxes S. Free state file taxes tax on income from Puerto Rican sources. Free state file taxes This does not include amounts paid for services performed as an employee of the United States. Free state file taxes However, you are subject to U. Free state file taxes S. Free state file taxes tax on your income from sources outside Puerto Rico. Free state file taxes In figuring your U. Free state file taxes S. Free state file taxes tax, you cannot deduct expenses allocable to income not subject to tax. Free state file 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. Free state file taxes You can use the bona fide residence test to qualify for the exclusions and the deduction only if you are either: A U. Free state file taxes S. Free state file taxes citizen, or A U. Free state file taxes S. Free state file taxes resident alien who is a citizen or national of a country with which the United States has an income tax treaty in effect. Free state file taxes You do not automatically acquire bona fide resident status merely by living in a foreign country or countries for 1 year. Free state file 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. Free state file 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. Free state file taxes Bona fide residence. Free state file taxes   To meet the bona fide residence test, you must have established a bona fide residence in a foreign country. Free state file taxes   Your bona fide residence is not necessarily the same as your domicile. Free state file taxes Your domicile is your permanent home, the place to which you always return or intend to return. Free state file taxes Example. Free state file 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. Free state file taxes The fact that you go to Scotland does not automatically make Scotland your bona fide residence. Free state file 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. Free state file 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. Free state file taxes You are clearly not a resident of Scotland in the first instance. Free state file taxes However, in the second, you are a resident because your stay in Scotland appears to be permanent. Free state file 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. Free state file taxes Determination. Free state file 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. Free state file 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. Free state file 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. Free state file taxes IRS cannot make this determination until you file Form 2555. Free state file taxes Statement to foreign authorities. Free state file 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. Free state file taxes Special agreements and treaties. Free state file 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. Free state file 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. Free state file taxes Example 1. Free state file taxes You are a U. Free state file taxes S. Free state file taxes citizen employed in the United Kingdom by a U. Free state file taxes S. Free state file taxes employer under contract with the U. Free state file taxes S. Free state file taxes Armed Forces. Free state file taxes You are not subject to the North Atlantic Treaty Status of Forces Agreement. Free state file taxes You may be a bona fide resident of the United Kingdom. Free state file taxes Example 2. Free state file taxes You are a U. Free state file taxes S. Free state file 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. Free state file taxes You are not a bona fide resident of the United Kingdom. Free state file taxes Example 3. Free state file taxes You are a U. Free state file taxes S. Free state file taxes citizen employed in Japan by a U. Free state file taxes S. Free state file taxes employer under contract with the U. Free state file taxes S. Free state file taxes Armed Forces. Free state file taxes You are subject to the agreement of the Treaty of Mutual Cooperation and Security between the United States and Japan. Free state file taxes Being subject to the agreement does not make you a bona fide resident of Japan. Free state file taxes Example 4. Free state file taxes You are a U. Free state file taxes S. Free state file taxes citizen employed as an “official” by the United Nations in Switzerland. Free state file taxes You are exempt from Swiss taxation on the salary or wages paid to you by the United Nations. Free state file taxes This does not prevent you from being a bona fide resident of Switzerland. Free state file taxes Effect of voting by absentee ballot. Free state file taxes   If you are a U. Free state file taxes S. Free state file 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. Free state file 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. Free state file taxes Uninterrupted period including entire tax year. Free state file 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. Free state file 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. Free state file 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. Free state file 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. Free state file taxes Example 1. Free state file taxes You arrived with your family in Lisbon, Portugal, on November 1, 2011. Free state file taxes Your assignment is indefinite, and you intend to live there with your family until your company sends you to a new post. Free state file taxes You immediately established residence there. Free state file taxes You spent April of 2012 at a business conference in the United States. Free state file taxes Your family stayed in Lisbon. Free state file taxes Immediately following the conference, you returned to Lisbon and continued living there. Free state file 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. Free state file taxes Example 2. Free state file taxes Assume the same facts as in Example 1, except that you transferred back to the United States on December 13, 2012. Free state file 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. Free state file taxes You may, however, qualify for the foreign earned income exclusion or the housing exclusion or deduction under the physical presence test (discussed later). Free state file taxes Bona fide resident for part of a year. Free state file 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. Free state file taxes Your period of bona fide residence can include an entire tax year plus parts of 2 other tax years. Free state file taxes Example. Free state file taxes You were a bona fide resident of Singapore from March 1, 2011, through September 14, 2013. Free state file taxes On September 15, 2013, you returned to the United States. Free state file 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. Free state file taxes Reassignment. Free state file 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. Free state file taxes Example 1. Free state file taxes You were a resident of Pakistan from October 1, 2012, through November 30, 2013. Free state file taxes On December 1, 2013, you and your family returned to the United States to wait for an assignment to another foreign country. Free state file taxes Your household goods also were returned to the United States. Free state file 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. Free state file 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. Free state file taxes You may, however, qualify for the foreign earned income exclusion or the housing exclusion or deduction under the physical presence test, discussed later. Free state file taxes Example 2. Free state file 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. Free state file taxes On December 1, 2013, you and your family returned to the United States for a month's vacation. Free state file taxes On January 2, 2014, you arrived in Turkey for your new assignment. Free state file taxes Because you did not interrupt your bona fide residence abroad, you meet the bona fide residence test. Free state file 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. Free state file taxes The 330 days do not have to be consecutive. Free state file taxes Any U. Free state file taxes S. Free state file taxes citizen or resident alien can use the physical presence test to qualify for the exclusions and the deduction. Free state file taxes The physical presence test is based only on how long you stay in a foreign country or countries. Free state file 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. Free state file taxes 330 full days. Free state file 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. Free state file taxes You can count days you spent abroad for any reason. Free state file taxes You do not have to be in a foreign country only for employment purposes. Free state file taxes You can be on vacation. Free state file 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. Free state file taxes Exception. Free state file 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. Free state file taxes See Waiver of Time Requirements, later. Free state file taxes Full day. Free state file taxes   A full day is a period of 24 consecutive hours, beginning at midnight. Free state file taxes Travel. Free state file 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. Free state file taxes Example. Free state file taxes You leave the United States for France by air on June 10. Free state file taxes You arrive in France at 9:00 a. Free state file taxes m. Free state file taxes on June 11. Free state file taxes Your first full day of physical presence in France is June 12. Free state file taxes Passing over foreign country. Free state file 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. Free state file taxes Example. Free state file taxes You leave the United States by air at 9:30 a. Free state file taxes m. Free state file taxes on June 10 to travel to Kenya. Free state file taxes You pass over western Africa at 11:00 p. Free state file taxes m. Free state file taxes on June 10 and arrive in Kenya at 12:30 a. Free state file taxes m. Free state file taxes on June 11. Free state file taxes Your first full day in a foreign country is June 11. Free state file taxes Change of location. Free state file taxes   You can move about from one place to another in a foreign country or to another foreign country without losing full days. Free state file 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. Free state file taxes Example 1. Free state file taxes You leave Ireland by air at 11:00 p. Free state file taxes m. Free state file taxes on July 6 and arrive in Sweden at 5:00 a. Free state file taxes m. Free state file taxes on July 7. Free state file taxes Your trip takes less than 24 hours and you lose no full days. Free state file taxes Example 2. Free state file taxes You leave Norway by ship at 10:00 p. Free state file taxes m. Free state file taxes on July 6 and arrive in Portugal at 6:00 a. Free state file taxes m. Free state file taxes on July 8. Free state file 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. Free state file taxes If you remain in Portugal, your next full day in a foreign country is July 9. Free state file taxes In United States while in transit. Free state file 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. Free state file taxes You are treated as traveling over areas not within any foreign country. Free state file taxes    Please click here for the text description of the image. Free state file taxes Figure 4-B How to figure the 12-month period. Free state file taxes   There are four rules you should know when figuring the 12-month period. Free state file taxes Your 12-month period can begin with any day of the month. Free state file taxes It ends the day before the same calendar day, 12 months later. Free state file taxes Your 12-month period must be made up of consecutive months. Free state file taxes Any 12-month period can be used if the 330 days in a foreign country fall within that period. Free state file 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. Free state file taxes You can choose the 12-month period that gives you the greatest exclusion. Free state file taxes In determining whether the 12-month period falls within a longer stay in the foreign country, 12-month periods can overlap one another. Free state file taxes Example 1. Free state file taxes You are a construction worker who works on and off in a foreign country over a 20-month period. Free state file 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. Free state file taxes Example 2. Free state file 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. Free state file 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. Free state file taxes By overlapping the 12-month periods in this way, you meet the physical presence test for the whole 20-month period. Free state file taxes See Figure 4-B, on the previous page. Free state file taxes Waiver of Time Requirements Both the bona fide residence test and the physical presence test contain minimum time requirements. Free state file 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. Free state file 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. Free state file 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. Free state file 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. Free state file 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. Free state file 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. Free state file taxes U. Free state file taxes S. Free state file taxes Travel Restrictions If you are present in a foreign country in violation of U. Free state file taxes S. Free state file 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. Free state file 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. Free state file 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. Free state file taxes For 2013, the only country to which travel restrictions applied was Cuba. Free state file taxes The restrictions applied for the entire year. Free state file taxes However, individuals working at the U. Free state file taxes S. Free state file taxes Naval Base at Guantanamo Bay in Cuba are not in violation of U. Free state file taxes S. Free state file taxes law. Free state file taxes Personal service income earned by individuals at the base is eligible for the foreign earned income exclusion provided the other requirements are met. Free state file 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. Free state file 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. Free state file taxes Your tax home is in a foreign country. Free state file taxes You meet either the bona fide residence test or the physical presence test. Free state file taxes To determine whether your tax home is in a foreign country, see Tax Home in Foreign Country, earlier. Free state file 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. Free state file taxes Foreign earned income does not include the following amounts. Free state file 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. Free state file taxes Pension or annuity payments you receive, including social security benefits (see Pensions and annuities, later). Free state file taxes Pay you receive as an employee of the U. Free state file taxes S. Free state file taxes Government. Free state file taxes (See U. Free state file taxes S. Free state file taxes Government Employees, later. Free state file taxes ) Amounts you include in your income because of your employer's contributions to a nonexempt employee trust or to a nonqualified annuity contract. Free state file 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. Free state file 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. Free state file taxes Earned income. Free state file taxes   This is pay for personal services performed, such as wages, salaries, or professional fees. Free state file taxes The list that follows classifies many types of income into three categories. Free state file 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. Free state file taxes For more information on earned and unearned income, see Earned and Unearned Income, later. Free state file 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. Free state file taxes Noncash income. Free state file 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. Free state file taxes Allowances or reimbursements. Free state file taxes   Earned income includes allowances or reimbursements you receive, such as the following amounts. Free state file taxes    Cost-of-living allowances. Free state file taxes Overseas differential. Free state file taxes Family allowance. Free state file taxes Reimbursement for education or education allowance. Free state file taxes Home leave allowance. Free state file taxes Quarters allowance. Free state file taxes Reimbursement for moving or moving allowance (unless excluded from income as discussed later in Reimbursement of employee expenses under Earned and Unearned Income). Free state file 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. Free state file taxes Foreign earned income is income you receive for working in a foreign country. Free state file taxes Where or how you are paid has no effect on the source of the income. Free state file 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. Free state file taxes Example. Free state file taxes You are a U. Free state file taxes S. Free state file taxes citizen, a bona fide resident of Canada, and working as a mining engineer. Free state file taxes Your salary is $76,800 per year. Free state file taxes You also receive a $6,000 cost-of-living allowance, and a $6,000 education allowance. Free state file taxes Your employment contract did not indicate that you were entitled to these allowances only while outside the United States. Free state file taxes Your total income is $88,800. Free state file taxes You work a 5-day week, Monday through Friday. Free state file taxes After subtracting your vacation, you have a total of 240 workdays in the year. Free state file taxes You worked in the United States during the year for 6 weeks (30 workdays). Free state file taxes The following shows how to figure the part of your income that is for work done in Canada during the year. Free state file 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. Free state file taxes Earned and Unearned Income Earned income was defined earlier as pay for personal services performed. Free state file taxes Some types of income are not easily identified as earned or unearned income. Free state file taxes Some of these types of income are further explained here. Free state file taxes Income from a sole proprietorship or partnership. Free state file taxes   Income from a business in which capital investment is an important part of producing the income may be unearned income. Free state file 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. Free state file taxes Capital a factor. Free state file 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. Free state file 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. Free state file taxes Because you do not have a net profit, the 30% limit does not apply. Free state file taxes Example 1. Free state file taxes You are a U. Free state file taxes S. Free state file taxes citizen and meet the bona fide residence test. Free state file taxes You invest in a partnership based in Cameroon that is engaged solely in selling merchandise outside the United States. Free state file taxes You perform no services for the partnership. Free state file taxes At the end of the tax year, your share of the net profits is $80,000. Free state file taxes The entire $80,000 is unearned income. Free state file taxes Example 2. Free state file taxes Assume that in Example 1 you spend time operating the business. Free state file taxes Your share of the net profits is $80,000; 30% of your share of the profits is $24,000. Free state file 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. Free state file taxes Capital not a factor. Free state file taxes   If capital is not an income-producing factor and personal services produce the business income, the 30% rule does not apply. Free state file taxes The entire amount of business income is earned income. Free state file taxes Example. Free state file taxes You and Lou Green are management consultants and operate as equal partners in performing services outside the United States. Free state file taxes Because capital is not an income- producing factor, all the income from the partnership is considered earned income. Free state file taxes Income from a corporation. Free state file 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. Free state file taxes Any amount over what is considered a reasonable salary is unearned income. Free state file taxes Example 1. Free state file taxes You are a U. Free state file taxes S. Free state file taxes citizen and an officer and stockholder of a corporation in Honduras. Free state file taxes You perform no work or service of any kind for the corporation. Free state file taxes During the tax year you receive a $10,000 “salary” from the corporation. Free state file taxes The $10,000 clearly is not for personal services and is unearned income. Free state file taxes Example 2. Free state file taxes You are a U. Free state file taxes S. Free state file taxes citizen and work full time as secretary-treasurer of your corporation. Free state file taxes During the tax year you receive $100,000 as salary from the corporation. Free state file taxes If $80,000 is a reasonable allowance as pay for the work you did, then $80,000 is earned income. Free state file taxes Stock options. Free state file 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. Free state file 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. Free state file 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. Free state file 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. Free state file taxes Any part of the earned income that is due to work you did outside the United States is foreign earned income. Free state file taxes   See Publication 525, Taxable and Nontaxable Income, for a discussion of the treatment of stock options. Free state file taxes Pensions and annuities. Free state file 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. Free state file taxes Royalties. Free state file taxes   Royalties from the leasing of oil and mineral lands and patents generally are a form of rent or dividends and are unearned income. Free state file 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. Free state file taxes Rental income. Free state file taxes   Generally, rental income is unearned income. Free state file 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. Free state file taxes Example. Free state file taxes Larry Smith, a U. Free state file taxes S. Free state file taxes citizen living in Australia, owns and operates a rooming house in Sydney. Free state file 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. Free state file 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. Free state file taxes It is all unearned income. Free state file taxes Professional fees. Free state file 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. Free state file taxes Income of an artist. Free state file taxes   Income you receive from the sale of paintings you created is earned income. Free state file taxes Scholarships and fellowships. Free state file 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. Free state file 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. Free state file taxes    Certain scholarship and fellowship income may be exempt under other provisions. Free state file taxes See Publication 970, Tax Benefits for Education, chapter 1. Free state file taxes Use of employer's property or facilities. Free state file 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. Free state file 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. Free state file taxes Example. Free state file taxes You are privately employed and live in Japan all year. Free state file taxes You are paid a salary of $6,000 a month. Free state file taxes You live rent-free in a house provided by your employer that has a fair rental value of $3,000 a month. Free state file taxes The house is not provided for your employer's convenience. Free state file taxes You report on the calendar-year, cash basis. Free state file 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. Free state file taxes Reimbursement of employee expenses. Free state file 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. Free state file taxes   The expenses for which you are reimbursed are not considered allocable (related) to your earned income. Free state file taxes If expenses and reimbursement are equal, there is nothing to allocate to excluded income. Free state file 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. Free state file taxes (See chapter 5. Free state file 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. Free state file taxes   These rules do not apply to the following individuals. Free state file taxes Straight-commission salespersons. Free state file 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. Free state file taxes Accountable plan. Free state file taxes   An accountable plan is a reimbursement or allowance arrangement that includes all three of the following rules. Free state file taxes The expenses covered under the plan must have a business connection. Free state file taxes The employee must adequately account to the employer for these expenses within a reasonable period of time. Free state file taxes The employee must return any excess reimbursement or allowance within a reasonable period of time. Free state file taxes Reimbursement of moving expenses. Free state file taxes   Reimbursement of moving expenses may be earned income. Free state file 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. Free state file taxes This section discusses reimbursements that must be included in earned income. Free state file taxes Publication 521, Moving Expenses, discusses additional rules that apply to moving expense deductions and reimbursements. Free state file 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. Free state file 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. Free state file 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. Free state file taxes Move from U. Free state file taxes S. Free state file taxes to foreign country. Free state file 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. Free state file 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. Free state file 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. Free state file taxes To figure the amount earned in the year of the move, multiply the reimbursement by a fraction. Free state file 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. Free state file 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. Free state file taxes The part earned in each year is figured as shown in the following example. Free state file taxes Example. Free state file taxes You are a U. Free state file taxes S. Free state file taxes citizen working in the United States. Free state file taxes You were told in October 2012 that you were being transferred to a foreign country. Free state file 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. Free state file taxes Your employer reimbursed you $2,000 in January 2013 for the part of the moving expense that you were not allowed to deduct. Free state file 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. Free state file 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. Free state file 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. Free state file taxes The remaining part of the reimbursement is for services performed in the foreign country in 2013. Free state file taxes This computation is used only to determine when the reimbursement is considered earned. Free state file taxes You would include the amount of the reimbursement in income in 2013, the year you received it. Free state file taxes Move between foreign countries. Free state file 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. Free state file taxes Move to U. Free state file taxes S. Free state file taxes   If you move to the United States, the moving expense reimbursement that you must include in income is generally considered to be U. Free state file taxes S. Free state file taxes source income. Free state file 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. Free state file 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. Free state file 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. Free state file taxes   See the discussion under Move from U. Free state file taxes S. Free state file taxes to foreign country , earlier, to figure the amount of the includible reimbursement considered earned in the year of the move. Free state file 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. Free state file taxes Example. Free state file taxes You are a U. Free state file taxes S. Free state file taxes citizen employed in a foreign country. Free state file 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. Free state file 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. Free state file 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. Free state file 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. Free state file 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. Free state file 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). Free state file taxes The remaining part of the includible reimbursement is for services performed in the foreign country in 2012. Free state file taxes You report the amount of the includible reimbursement in 2013, the year you received it. Free state file 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. Free state file taxes Storage expense reimbursements. Free state file 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. Free state file taxes U. Free state file taxes S. Free state file 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. Free state file taxes This includes amounts paid from both appropriated and nonappropriated funds. Free state file 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. Free state file taxes United States Armed Forces exchanges. Free state file taxes Commissioned and noncommissioned officers' messes. Free state file taxes Armed Forces motion picture services. Free state file taxes Kindergartens on foreign Armed Forces installations. Free state file taxes Amounts paid by the United States or its agencies to persons who are not their employees may qualify for exclusion or deduction. Free state file taxes If you are a U. Free state file taxes S. Free state file taxes Government employee paid by a U. Free state file taxes S. Free state file 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. Free state file taxes S. Free state file taxes Government and does not qualify for exclusion or deduction. Free state file taxes If you have questions about whether you are an employee or an independent contractor, get Publication 15-A, Employer's Supplemental Tax Guide. Free state file taxes American Institute in Taiwan. Free state file 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. Free state file taxes If you are an employee of the American Institute in Taiwan, allowances you receive are exempt from U. Free state file taxes S. Free state file taxes tax up to the amount that equals tax-exempt allowances received by civilian employees of the U. Free state file taxes S. Free state file taxes Government. Free state file taxes Allowances. Free state file taxes   Cost-of-living and foreign-area allowances paid under certain acts of Congress to U. Free state file taxes S. Free state file 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. Free state file taxes Post differentials are wages that must be included in gross income, regardless of the act of Congress under which they are paid. Free state file taxes More information. Free state file taxes   Publication 516, U. Free state file taxes S. Free state file taxes Government Civilian Employees Stationed Abroad, has more information for U. Free state file taxes S. Free state file taxes Government employees abroad. Free state file 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. Free state file taxes The meals are furnished: On the business premises of your employer, and For the convenience of your employer. Free state file 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. Free state file 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. Free state file taxes Amounts you do not include in income because of these rules are not foreign earned income. Free state file taxes If you receive a Form W-2, excludable amounts should not be included in the total reported in box 1 as wages. Free state file taxes Family. Free state file taxes   Your family, for this purpose, includes only your spouse and your dependents. Free state file taxes Lodging. Free state file 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. Free state file taxes Business premises of employer. Free state file taxes   Generally, the business premises of your employer is wherever you work. Free state file 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. Free state file 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. Free state file taxes Convenience of employer. Free state file taxes   Whether meals or lodging are provided for your employer's convenience must be determined from all the facts and circumstances. Free state file 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. Free state file 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. Free state file taxes Condition of employment. Free state file taxes   Lodging is provided as a condition of employment if you must accept the lodging to properly carry out the duties of your job. Free state file 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. Free state file taxes Foreign camps. Free state file taxes   If the lodging is in a camp located in a foreign country, the camp is considered part of your employer's business premises. Free state file 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. Free state file 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. Free state file taxes Foreign earned income was defined earlier in this chapter. Free state file taxes You also can choose to exclude from your income a foreign housing amount. Free state file taxes This is explained later under Foreign Housing Exclusion. Free state file 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. Free state file taxes Your foreign earned income exclusion is limited to your foreign earned income minus your foreign housing exclusion. Free state file 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. Free state file taxes This includes any expenses, losses, and other normally deductible items allocable to the excluded income. Free state file taxes For more information about deductions and credits, see chapter 5 . Free state file taxes Limit on Excludable Amount You may be able to exclude up to $97,600 of your foreign earned income in 2013. Free state file 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). Free state file 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. Free state file taxes You do not both need to meet the same test. Free state file taxes Together, you and your spouse can exclude as much as $195,200. Free state file taxes Paid in year following work. Free state file 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. Free state file taxes If you report your income on a cash basis, you report the income on your return for the year you receive it. Free state file 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. Free state file taxes For an exception to this general rule, see Year-end payroll period, later. Free state file taxes Example. Free state file taxes You were a bona fide resident of Brazil for all of 2012 and 2013. Free state file taxes You report your income on the cash basis. Free state file taxes In 2012, you were paid $84,200 for work you did in Brazil during that year. Free state file taxes You excluded all of the $84,200 from your income in 2012. Free state file taxes In 2013, you were paid $117,300 for your work in Brazil. Free state file taxes $18,800 was for work you did in 2012 and $98,500 was for work you did in 2013. Free state file taxes You can exclude $10,900 of the $18,800 from your income in 2013. Free state file taxes This is the $95,100 maximum exclusion in 2012 minus the $84,200 actually excluded that year. Free state file 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. Free state file taxes You can exclude $97,600 of the $98,500 you were paid for work you did in 2013 from your 2013 income. Free state file 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). Free state file 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). Free state file taxes Year-end payroll period. Free state file 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. Free state file 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. Free state file taxes The period for which the payment is made is a normal payroll period of your employer that regularly applies to you. Free state file taxes The payroll period includes the last day of your tax year (December 31 if you figure your taxes on a calendar-year basis). Free state file taxes The payroll period is not longer than 16 days. Free state file 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. Free state file taxes Example. Free state file taxes You are paid twice a month. Free state file 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. Free state file 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. Free state file taxes Because all of the above conditions are met, the pay you received on January 1, 2013, is considered earned in 2013. Free state file taxes Income earned over more than 1 year. Free state file 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. Free state file taxes For example, a bonus may be based on work you did over several years. Free state file taxes You determine the amount of the bonus that is considered earned in a particular year in two steps. Free state file taxes Divide the bonus by the number of calendar months in the period when you did the work that resulted in the bonus. Free state file taxes Multiply the result of (1) by the number of months you did the work during the year. Free state file taxes This is the amount that is subject to the exclusion limit for that tax year. Free state file taxes Income received more than 1 year after it was earned. Free state file taxes   You cannot exclude income you receive after the end of the year following the year you do the work to earn it. Free state file taxes Example. Free state file taxes   You were a bona fide resident of Sweden for 2011, 2012, and 2013. Free state file taxes You report your income on the cash basis. Free state file 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. Free state file taxes You excluded all the income on your 2011 and 2012 returns. Free state file 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. Free state file 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. Free state file taxes You must include the $10,000 in income. Free state file taxes You can exclude all of the $82,000 received for work you did in 2013. Free state file taxes Community income. Free state file taxes   The maximum exclusion applies separately to the earnings of spouses. Free state file taxes Ignore any community property laws when you figure your limit on the foreign earned income exclusion. Free state file taxes Part-year exclusion. Free state file 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. Free state file 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. Free state file 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. Free state file 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. Free state file taxes Example. Free state file 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. Free state file taxes You can exclude a maximum of 75/365 of $97,600, or $20,055, of your foreign earned income for 2013. Free state file 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. Free state file taxes Physical presence test. Free state file taxes   Under the physical presence test, a 12-month period can be any period of 12 consecutive months that includes 330 full days. Free state file 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. Free state file taxes Example. Free state file 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. Free state file taxes You figure the maximum exclusion for 2012 as follows. Free state file taxes Beginning with June 1, 2012, count forward 330 full days. Free state file taxes Do not count the 16 days you spent in the United States. Free state file taxes The 330th day, May 12, 2013, is the last day of a 12-month period. Free state file taxes Count backward 12 months from May 11, 2013, to find the first day of this 12-month period, May 12, 2012. Free state file taxes This 12-month period runs from May 12, 2012, through May 11, 2013. Free state file taxes Count the total days during 2012 that fall within this 12-month period. Free state file taxes This is 234 days (May 12, 2012 – December 31, 2012). Free state file taxes Multiply $95,100 (the maximum exclusion for 2012) by the fraction 234/366 to find your maximum exclusion for 2012 ($60,802). Free state file taxes You figure the maximum exclusion for 2013 in the opposite manner. Free state file taxes Beginning with your last full day, September 30, 2013, count backward 330 full days. Free state file taxes Do not count the 16 days you spent in the United States. Free state file taxes That day, October 20, 2012, is the first day of a 12-month period. Free state file taxes Count forward 12 months from October 20, 2012, to find the last day of this 12-month period, October 19, 2013. Free state file taxes This 12-month period runs from October 20, 2012, through October 19, 2013. Free state file taxes Count the total days during 2013 that fall within this 12-month period. Free state file taxes This is 292 days (January 1, 2013 – October 19, 2013). Free state file taxes Multiply $97,600, the maximum limit, by the fraction 292/365 to find your maximum exclusion for 2013 ($78,080). Free state file taxes Choosing the Exclusion The foreign earned income exclusion is voluntary. Free state file taxes You can choose the exclusion by completing the appropriate parts of Form 2555. Free state file 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. Free state file taxes A return filed by the due date (including any extensions). Free state file taxes A return amending a timely-filed return. Free state file 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. Free state file taxes A return filed within 1 year from the original due date of the return (determined without regard to any extensions). Free state file taxes Filing after the above periods. Free state file 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. Free state file 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. Free state file 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. Free state file taxes 911-7(a)(2)(i)(D). Free state file 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. Free state file taxes You must request a private letter ruling under Income Tax Regulation 301. Free state file taxes 9100-3 and Revenue Procedure 2013-1, 2013-1 I. Free state file taxes R. Free state file taxes B. Free state file taxes 1, available at www. Free state file taxes irs. Free state file taxes gov/irb/2013-01_IRB/ar06. Free state file taxes html. Free state file 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. Free state file taxes Foreign tax credit or deduction. Free state file taxes