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    Form 2555

    Anyone familiar with foreign income exclusion?

    Taxpayer moved to Japan and started working there in May 2010 until today.

    He wants to get the foreign income exclusion. So he has to pass the physical presence test.

    He chooses to have the physical presence test based on 5-1-2010 to 4-30-2011. He was physically present in Japan for more than 330 days during this period.

    So he is meets the physical presence test for the foreign income exclusion.

    Anything wrong with it? Can he arbitrarily picks the period between 5-1-2010 to 4-30-2011 for the physical presence test?

    #2
    How can that be 365 days?

    5/1 - 5/1 = 365 days.

    April has 30 days.
    March has 31 days, it's the 15th.

    So 365 - 16 (march) - 30 (april) = 319?

    Or do you mean he's still in Japan right now? In which case yes, that 12-month period would work fine.

    Comment


      #3
      Originally posted by David1980 View Post
      How can that be 365 days?

      5/1 - 5/1 = 365 days.

      April has 30 days.
      March has 31 days, it's the 15th.

      So 365 - 16 (march) - 30 (april) = 319?

      Or do you mean he's still in Japan right now? In which case yes, that 12-month period would work fine.
      Well, that's exactly my question.

      Taxpayer wants to 'choose' the period from 5-1-2010 to 4-30-2011 for the physical presence test. He was in Japan for all the 365 days during this period and he would pass the physical presence test.

      So my question is whether he can arbitrarily choose a period for the physical presence test.

      I think I have read before that the taxpayer can arbitrarily choose a period as long as the starting day of the period falls on the tax year in question.

      Comment


        #4
        Oh, so he's still in Japan? Then yes, that's perfectly fine. You can choose the 12 month period. See page 15 of Publication 54.

        So for determining if he qualifies for physical presence test the 5/1 - 4/30 period works just fine. Then for determining the amount of the exclusion, you enter the number of days actually in the country during the tax year.

        Comment


          #5
          Originally posted by David1980 View Post
          Oh, so he's still in Japan? Then yes, that's perfectly fine. You can choose the 12 month period. See page 15 of Publication 54.

          So for determining if he qualifies for physical presence test the 5/1 - 4/30 period works just fine. Then for determining the amount of the exclusion, you enter the number of days actually in the country during the tax year.
          I think I read before that either the beginning date or the ending date of the chosen period has to fall in the taxable year. But I didn't see they mentioned this in the 4 requirements to choose a period on page 15. Has the requirement changed?

          Comment


            #6
            that's not the form number you need.

            Look at 2350.
            ChEAr$,
            Harlan Lunsford, EA n LA

            Comment


              #7
              Originally posted by ChEAr$ View Post
              that's not the form number you need.

              Look at 2350.
              Sorry I don't get what you mean. Are you saying the starting date has to fall in the tax year only when he wants to file for an extension?

              Form 2350 is for extension. I think it has nothing to do with the foreign income exclusion that we are discussing.

              Comment


                #8
                Originally posted by AccTaxMan View Post
                Sorry I don't get what you mean. Are you saying the starting date has to fall in the tax year only when he wants to file for an extension?

                Form 2350 is for extension. I think it has nothing to do with the foreign income exclusion that we are discussing.
                But it does relate to the satisfacton of the 330 day rule which may begin in 2010 but not yet satisfied by 4/18.

                Just used it for a client in Iraq this year. He arrived there last Sep 10, so his 330 days begins on Sep 11 and should be satisfied this coming August. the ... xxth. whenever.

                The alternate is to file without the exclusion, pay the tax and when the time is satisfied, file an amendment for refund.
                ChEAr$,
                Harlan Lunsford, EA n LA

                Comment

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