Foreign Income Exclusion

[susieq]

Taxpayer began work in Dubai 3/2/06 and continued working there thru 3/03/07. During that period she spent 17 days in the US on vacation. For 2006 she was allowed to exclude a maximum of 68,886 of her Foreign Earned Income.

On 3/3/07 she returned to the US. She went back to Dubai on 3/30/07.

She worked in Dubai from 3/30/07 thru 4/1/2008 during which time she returned to the US for a total of 28 days.

Her only qualifying period in which she spent 330 days out of the US for 2007 is from 04/01/07 – 4/01/08.
She will exclude the foreign income earned from 04/01/07 – 12/31/07.

Since she qualified in 2006 for the period including the first 2 months of 2007 is she also allowed to exclude the foreign earned income from January and February of 2007?

[Kram BergGold]

No

Sorry, not much else to say in response.

[travis bickle]

the time period abroad can overlap

Taxpayer began work in Dubai 3/2/06 and continued working there thru 3/03/07. During that period she spent 17 days in the US on vacation. For 2006 she was allowed to exclude a maximum of 68,886 of her Foreign Earned Income.

On 3/3/07 she returned to the US. She went back to Dubai on 3/30/07.

She worked in Dubai from 3/30/07 thru 4/1/2008 during which time she returned to the US for a total of 28 days.

Her only qualifying period in which she spent 330 days out of the US for 2007 is from 04/01/07 – 4/01/08.
She will exclude the foreign income earned from 04/01/07 – 12/31/07.

Since she qualified in 2006 for the period including the first 2 months of 2007 is she also allowed to exclude the foreign earned income from January and February of 2007?

here is an example taken straight from the irs website:
(http://www.irs.gov/businesses/small/...=96968,00.html)

You work in New Zealand for a 20-month period from January 1, 2007, through August 31, 2008, except that you spend 28 days in February 2007 and 28 days in February 2008 on vacation in the United States. You are present in New Zealand 330 full days during each of the following two 12-month periods: January 1, 2007 - December 31, 2007, and September 1, 2007 - August 31, 2008. By overlapping the 12-month periods in this way, you meet the physical presence test for the whole 20-month period. Refer to Chapter 4, Figure 4-B in Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad.

Notice how the IRS says that you can count the period from Sep 1 to Dec 31 TWICE [in their example]. I would go all the way back to when they first left the country in 2006 and start drawing timelines to see how/if you client benefits.