330+ Days Outside The US = No Income Tax

If you are a US citizen, living outside the US, then all your income may not be taxed. Yes, if you live as an expat, then at tax filing time, you can file the “Foreign Income Exclusion” form, number 2555.

But, there’s a catch. (Isn’t there always a catch?) The catch is, you must really be living outside the United States for 90% or more of the time (that works to be 330 days or more). It doesn’t mean just calling your expat home your “Primary residence.” It doesn’t mean come home again for “just” the summer months. Nope, for your income to be excluded from tax, you must stay clear of the US for 330 days or more.

This is on my mind because someone just wrote to me asking the same questions. She asked how (or if) they can visit the United States and how it affects their taxes. I answered her, but then I thought others may be wondering the same thing. So, here is my reply:

Yes, about spending 35 days in the US, it’s true, unfortunately. If
someone spends 35 days in the US, they are then ineligible for foreign
income exclusion. It’s part of the physical presence test and I agree
it stinks.

I think the actual IRS text reads that you must be outside the US for
330 days, but it’s the same. It’s more important to understand that
those 35 days are cumulative and not consecutive. Also, understand
that the 35 days is over *any* span of 12 months, not just calendar
year.
So, as a detailed example, someone fails the physical presence test if
their vacations were:

  • July 2011 – 5 days
  • December 2011 – 20 days
  • May 2012 – 10 days
  • June 2012 – 5 days

—–that’s 40 days within 12 months, failing the test. My wife and I have been super careful in counting our days spent over the past 6-7 years outside the US. We never go over 33 (including the entry/exit days in travel). One flight delay could cost us thousands, as you
know.

Of course, I have to add that I am not a financial expert. All the above comes from years of experience as an expat, but not as a financial planner, tax attorney or some other professionally licensed money guru.

Hope this can help at least someone else out there.

Lastly, here’s a flowchart graphic I stole from the IRS. At least it’s less confusing than the 7000 pages of tax code.

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Published by

Jeff

An American who likes to move around. I now live on the eastern Canadian seaboard. My job? A stay-at-home dad for two cute but demanding bosses. My wife? Also cute; not so demanding. My wife and I both love travel. We met in South Korea, travelled across Australia, India, Europe and beyond. We lived in Czech Republic for four years. Many stories to tell and experience to share. If you let me, I will help you travel as we do. Enjoy.

66 thoughts on “330+ Days Outside The US = No Income Tax”

  1. Hi Jeff ,
    If you get injured in overseas and then company decided to send you back home to USA for a medical treatment , So in this case do you think the 330 day will be affected for tax return if your treatment takes more than 35 days in USA ?

    Respectfully,
    Jason Kabrini

    1. The original posting said that to qualify for the FEIE you have to be out of the US for at least 330 days. This is misleading as it is correct only for those seeking the FEIE under the physical presence test. If you seek an FEIE under the bona-fide (overseas) residence test, there is no 330 days minimum rule. So if you still have a home and family in the USA then you may have to worry about the 330 days. If you all moved overseas and bought or rented a home, you don’t.

  2. If you earn your income in the US, via rental properties, but live overseas for 330 plus days (retired), are you eligible for the same ex-pat tax breaks?

    1. This is for all – as long as you pass the IRS’ two tests (physical and residence), then yes, you are eligible.

      Hoping the best for you Janet,
      -Jeff

  3. So…. if we are expats and my husband is the sole income earner, can just my children and I stay in the US longer than 35 days without it affecting him having to pay us taxes??

  4. Hi Jeff,
    Thank you for this very helpful article. My husband and I are already ExPats (going on 3 years now). Someone told us that if we have to go back to the US for business, those days wouldn’t count as part of the 330 days. Any idea if that’s true?

      1. So if I’m in Mexico for 300 days and in the US for 65 days on business travel, I can still qualify for the foreign tax deductions? Or is it a 330 day cut-off no matter the type of travel?

  5. I am in a similar situation, I go to the US to do military drill and unfortunately will miss my 330 by a few days in a year window. I was curious if it was business/work related only if there was a certain amount of time that was exempt. I find it to be unlikely but I see others had similar questions.

  6. Hello Jeff
    I work for a us company, I earn my income in the US, but I live all year in Mexico. The Company already made a tax deductions. I want to know if I eligible for “Foreign Income Exclusion”

    Please help me.

    Best Regards

    1. Hi Marcos – yes, sounds like you’re 100% eligible. Check the IRS doc cited in the post to be sure if you pass both “tests.”

      Cheers,
      -Jeff

  7. Ok so I let the US on October 24, 2015. I was not able to claim the “Foreign Income Exclusion” for 2015 because I had not been out of the US for 330 days yet. I am told I need to do an amendment for 2015 when I file my 2016 taxes. I went back to the US (for 21 days) on Nov 17th of 2016, until Dec 7th of 2016, when I returned back overseas. My biggest issue is when can I go back to the US for good without having to worry about being taxed for not paying taxes. These laws are kind of confusing. Can you clarify my situation please.

    1. Hi Jeffrey,
      Sorry for the late reply.

      For the 2015 tax year, perhaps you need the 2015 amendment. If a professional tax guy/gal told you to do so, then I’d go with it.

      For the 2016 tax year, it sounds like you’re safe, given you were in the States for only 21 days. By “safe,” I mean you passed the physical presence test of 330 days outside.

      For the 2017 tax question (“When can I go back?”) – again, it comes down to the 2 tests (true residence and physical presence). If both tests don’t demonstrate your income is exempt, then that’s the answer. Those 2 tests make the confusing laws pretty straightforward, right? We just choose between passing the tests or being in the States.

  8. I’m a U.S citizen and have stayed abroad for like 6yrs, I wonder if I’ll be paying such taxes for staying outside the U.S for so long because people around saying that this might happen when I planned to go back to U.S.

    1. Hi Sasha,

      If you’re living abroad (and making less than $110k), then you won’t be paying taxes.

      Now, should you be filing your taxes every year? Absolutely yes.
      You need to file every year. You won’t be paying anything, but yes, you need to file.

      Use a tax professional (who knows about FACTA, FBAR and the 2555 form at the least).

      -Jeff

  9. Need verification on the 330 status which basically says you need to be off U.S. soil for 35 days. If an individual is required to come back to the states to conduct official business for 5 days will he still meet the 330 deduction if he is only out of country for 325 days due to the required business trip?

    1. Hi Russ,

      Just to be clear, you need to be off U.S. soil for 330 days. That’s it, for one of the two ‘tests’ IRS uses to determine your eligible for FEIE.
      To be super clear, if you’re on U.S. soil for 30 days (or more), then no, you do not meet the requirements for excluding your income. It doesn’t matter if it’s for “official business” or vacation or medical leave or any reason.

      But really, ask an official tax person. I’m only a blogger. Or check out the linked IRS pdf in the blog post.

      Thank you,
      -Jeff

  10. Hi,

    I am a little confused about how to determine the 12-month period. For 2016 tax return, can I select April 15,2016 to April 14, 2017? Or should it be within the tax year (2016) and before? I’ll be glad if you have any comments asap…

  11. I find the chart to be a bit inaccurate. I do not have foreign earned income, nor is my tax home in a different country. I do however work for a U.S company overseas and I still qualify for the exemption as long as I’m outside the U.S for no less than 330 day in a consecutive 12 month period.

    1. Sounds to me Heath that you do have foreign earned income. (“Foreign” describes where you earned it, not the income/currency source)
      Anyway, if you qualify, then you should ask your accountant to file a 2555 for you, if you’re not already. Again, I’m not a qualified tax professional, nor do I play one online. But from your reply, I think there’s confusion that needs to be cleared up.

      Best,
      -Jeff

  12. if i work outside of the us for 10 months and the job is done can i go to mexico for vacation until i have been out of the country for 330 days then come back the the u.s. will i still be tax exempt?

  13. You mentioned something above about having to make less than 110k.
    If I pass the physical/residency test but make more than 110k, am I still eligible?

    Thanks!

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