Foreign Earned Income Exclusion: Tax Home for less than 12 months

Discussion in 'US Taxes' started by JamesAndCourtney.bowen, Oct 6, 2008.

  1. Hello all,

    I am currently residing and working in Malaysia, and am confused about
    a detail of the Foreign Earned Income Exclusion: Is a minimum 12-month
    period actually necessary for the Tax Home requirement?
    I started working and living here at the start of Feb. '08 and had
    every intention and plan of staying here 2-5 years on assignment (with
    a Malaysian Corporation that I partially control), but circumstances
    are cutting my foreign stay short. However, I intend to work/live here
    through early December, and then complete my Physical Presence Test
    330 day requirement via a trip (either business or pleasure, or a mix)
    to Mexico from December to January. (I will return to the USA BEFORE
    February '09.)

    As I read Publication 54 and Revenue Ruling 93-86, since my intent was
    to work in this foreign country for well more than 1 year, the fact
    that my assignment is now being cut short of 1 year is irrelevant. My
    intent can be seen from the planning I did up front, from the fact
    that we signed a 2-year condo lease in Malaysia, that I brought my
    wife and child here with me, that we bought rather than renting a car
    here, that we were active in local organizations, etc. It seems that
    as long as I meet the 330 day physical presence test (in Malaysia plus
    Mexico in this case), I will qualify for the FEIE.

    Is this correct? Does the fact that I'm taking a trip (which may be
    all or partially vacation) to a different country (other than the one
    I've established as my tax home) at the tail-end of this 330-day
    Physical Presence period matter or hurt my case at all?

    Thank you!
    JamesAndCourtney.bowen, Oct 6, 2008
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