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Lev, Tax Advisor
Category: Tax
Satisfied Customers: 29573
Experience:  Taxes, Immigration, Labor Relations
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What is the tax implication for this scenario Person worked

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What is the tax implication for this scenario:
Person worked in another country for over 5 years holding a valid work permit and visa for that country.
Person filed taxes in U.S. yearly but always used physical presence in lieu of bona fide residence.
If in 2011 that person only worked the 1st 9 months in the other country and was laid off and had to return to the U.S., can he still claim bona fide resident and take advantage of the overseas tax deduction of approximately $95K?
If that person now works in the U.S during October through December, does this impact the taxes on his salary from overseas.
Assume the income for that person is $120K for the first 9 months of 2011.


Hi and welcome to Just Answer!
To be eligible to claim foreign earned income exclusion - the person should be in the foreign country at least 330 days during any 12 months period. The determination should be made separately for each year.

If the person returned to the US - for instance on Oct 8, 2011 - he/she might be able to claim the exclusion for 2011 prorated according to days the person was in a foreign country during 2011. The person may use 12 month period between Oct 8, 2010 and Oct 8, 2011 - and would qualify for the exclusion if during this period he/she were in a foreign country at least 330 days - then - take days he/she were in a foreign country in 2011 - assuming 270 - and may claim an exclusion $92,900 * 270 / 365 = $68,720 on the 2011 tax return.
Plus housing allowance if applicable.


so it would be prorated - there was no problem meeting the 330 day exclusion between say 1 sept 2010 to 1 sept 2011


and any other income in the u.s. would just be added to the foreign earned income for tax purposed

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