Foreign Income Exclusion

[John3cpa]

Client is an engineer for a US company who has taken an assignment with that company in Australia. He left the US Sept 29, 2008 leaving his wife and baby in the US, returned for 6 days at Christmas then went back to Australia. His Auzie assignment is expectexd to last through Oct 2009, with periodic returns to US for vacation. I see that there is a 330 day requirement in order to meet the foreign physical presence test. Would you file the 2008 return now without the exclusion, then amend it to get the exclusion when the 330 days are met, or extend the return (paying any tax due) until the 330 days run which will be before the Oct 15 extension date??
Or...am I not reading the rules correctly? First one of these for me!

[BHoffman]

Cut from: http://www.irs.gov/businesses/small/...=96980,00.html


"Part Year Exclusion
Part-year exclusion. If you qualify under either the bona fide residence test or the physical presence test for only part of the year, you must adjust the maximum limit based on the number of qualifying days in the year. 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.
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. 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."

Don't know if that will answer your question, John, but I'm giving you a bump.

[sea-tax]

See the tax book deluxe page 14-13 and 14-14 I think all will be explained there. Good Luck

[travis bickle]

Also take a

look at this from the IRS website

http://www.irs.gov/businesses/small/international/article/0,,id=96782,00.html

Essentially you use Form 2350 to file an extension in the case described by your client.

It is not a big deal, you will do it in minutes.