FEIE, physical presence test in first year

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locke1141
Posts: 19
Joined: Wed Sep 30, 2009 12:45 pm

FEIE, physical presence test in first year

Post by locke1141 »

Hey

I am thinking about taking a new expat assignment for a foreign company. I’ve been offered an October 24 2021 onboarding date.

To qualify for FEIE, is it correct that I have to file for an extension until October 15 2022 (exact day may be wrong)? At that point, I would pass the physical presence test, whereas at the normal April/June deadline I wouldn’t. After the first year, I should be able to file on-time with full FEIE exclusion without special shenanigans…at least I think it works that way…

My previous assignment included accountant services as part of my package, this one doesn’t, so I’m trying to work up my confidence to DIY my expat taxes if at all possible. Thanks!
livesoft
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Joined: Thu Mar 01, 2007 8:00 pm

Re: FEIE, physical presence test in first year

Post by livesoft »

Well, when I did this I also had to make sure that I did not come back to the States for too many days of vacations and weddings. Of course, I could go on vacations to non-US places. And to be clear, Yes, you can file for an extension even if you do not use FEIE. We file for extensions routinely just to make our lives easier.
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m0derton
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Joined: Sun Apr 04, 2021 1:40 am

Re: FEIE, physical presence test in first year

Post by m0derton »

You could just file normally for the 2021 tax year, then amend your tax return after you have completed the physical presence test.
cowdoc
Posts: 19
Joined: Thu Mar 06, 2008 5:39 pm

Re: FEIE, physical presence test in first year

Post by cowdoc »

The answers to all of your questions can be found in IRS Publication 54 Tax Guide for US Citizens and Resident Aliens Living Abroad. Essentially you need to become deeply familiar with this document. If you intend on staying indefinitely, I would be sure to satisfy the Physical Presence Test for the 2022 tax year while simultaneously doing what it takes to qualify for bona fide residence. If you do things right you'll be able to capture a "partial FEIE" for late 2021 once you have established bone fide residence. I'm not a tax professional or otherwise qualified to give tax advice, so the details are in Publication 54. You may want to hire a professional, but you'll still want to learn what's n Pub 54.
cowdoc
Posts: 19
Joined: Thu Mar 06, 2008 5:39 pm

Re: FEIE, physical presence test in first year

Post by cowdoc »

Apologies Locke 1141, I got vague on you and failed to directly answer you question. Yes, you can file extensions and qualify for part of 2021 under the Physical Presence test. That is one way to do it. The other way involves filing for 2021 and 2022 in 2023 after you qualify as a Bone Fide resident.
Topic Author
locke1141
Posts: 19
Joined: Wed Sep 30, 2009 12:45 pm

Re: FEIE, physical presence test in first year

Post by locke1141 »

I appreciate everyone’s help, and yes, I do need to get more comfortable reading tax law from the source publications.
FlyingMoose
Posts: 551
Joined: Wed Mar 04, 2009 10:48 pm

Re: FEIE, physical presence test in first year

Post by FlyingMoose »

I use a company called Expat Tax Professionals who specialize in this. They’re not cheap though, but they’re very helpful. Their website is their name with .com at the end. My return is very long and complicated. They also file the FBAR for me.
plats
Posts: 433
Joined: Mon Dec 31, 2007 9:46 pm

Re: FEIE, physical presence test in first year

Post by plats »

If you’re paying taxes in this foreign country one more idea would be to file as usual for 2021 and use the foreign tax deduction, then use FEIE going forward. If you qualify as a bone fide foreign resident in 2022 you won’t have any limits to time you spend back home.
sfnerd
Posts: 305
Joined: Tue Apr 08, 2014 1:16 am

Re: FEIE, physical presence test in first year

Post by sfnerd »

With your dates, an October extension is the way to go. You actually get an automatic extension (with no need to file) until June, but that will be too early for you.

It really depends on the tax rate in your new place of residence on whether or not it's worth it. If you're in a high tax locale, it might not be worth it to do FEIE in the first year (or even in subsequent years).

Congrats on the new gig, and good luck!
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