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Need To File State Taxes Only

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Need To File State Taxes Only

Need to file state taxes only Publication 969 - Introductory Material Table of Contents What's New Reminders IntroductionOrdering forms and publications. Need to file state taxes only Tax questions. Need to file state taxes only What's New Federal tax benefits for same-sex married couples. Need to file state taxes only   For federal tax purposes, individuals of the same sex are considered married if they were lawfully married in a state (or foreign country) whose laws authorize the marriage of two individuals of the same sex, even if the state (or foreign country) in which they now live does not recognize same-sex marriage. Need to file state taxes only For more information, see Publication 501. Need to file state taxes only Health flexible spending arrangements (FSAs). Need to file state taxes only  The following rules apply to health FSAs for plan years beginning after December 31, 2012. Need to file state taxes only Salary reduction contributions to your health FSA cannot be more than $2,500 a year (indexed for inflation). Need to file state taxes only Your employer may choose to change your cafeteria plan to allow you to carry over up to $500 of unused amounts remaining at the end of the plan year in a health FSA to be paid or reimbursed for qualified medical expenses incurred during the following plan year. Need to file state taxes only For more information, see Balance in an FSA under Flexible Spending Arrangements (FSAs), later. Need to file state taxes only Reminders Future Developments. Need to file state taxes only  For the latest information about developments related to Publication 969, such as legislation enacted after it was published, go to www. Need to file state taxes only IRS. Need to file state taxes only gov/pub969. Need to file state taxes only Photographs of missing children. Need to file state taxes only  The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Need to file state taxes only Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. Need to file state taxes only You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child. Need to file state taxes only Introduction Various programs are designed to give individuals tax advantages to offset health care costs. Need to file state taxes only This publication explains the following programs. Need to file state taxes only Health savings accounts (HSAs). Need to file state taxes only Medical savings accounts (Archer MSAs and Medicare Advantage MSAs). Need to file state taxes only Health flexible spending arrangements (FSAs). Need to file state taxes only Health reimbursement arrangements (HRAs). Need to file state taxes only An HSA may receive contributions from an eligible individual or any other person, including an employer or a family member, on behalf of an eligible individual. Need to file state taxes only Contributions, other than employer contributions, are deductible on the eligible individual's return whether or not the individual itemizes deductions. Need to file state taxes only Employer contributions are not included in income. Need to file state taxes only Distributions from an HSA that are used to pay qualified medical expenses are not taxed. Need to file state taxes only An Archer MSA may receive contributions from an eligible individual and his or her employer, but not both in the same year. Need to file state taxes only Contributions by the individual are deductible whether or not the individual itemizes deductions. Need to file state taxes only Employer contributions are not included in income. Need to file state taxes only Distributions from an Archer MSA that are used to pay qualified medical expenses are not taxed. Need to file state taxes only A Medicare Advantage MSA is an Archer MSA designated by Medicare to be used solely to pay the qualified medical expenses of the account holder who is enrolled in Medicare. Need to file state taxes only Contributions can only be made by Medicare. Need to file state taxes only The contributions are not included in your income. Need to file state taxes only Distributions from a Medicare Advantage MSA that are used to pay qualified medical expenses are not taxed. Need to file state taxes only A health FSA may receive contributions from an eligible individual. Need to file state taxes only Employers may also contribute. Need to file state taxes only Contributions are not includible in income. Need to file state taxes only Reimbursements from an FSA that are used to pay qualified medical expenses are not taxed. Need to file state taxes only An HRA must receive contributions from the employer only. Need to file state taxes only Employees may not contribute. Need to file state taxes only Contributions are not includible in income. Need to file state taxes only Reimbursements from an HRA that are used to pay qualified medical expenses are not taxed. Need to file state taxes only Comments and suggestions. Need to file state taxes only   We welcome your comments about this publication and your suggestions for future editions. Need to file state taxes only   You can write to us at the following address: Internal Revenue Service Tax Forms and Publications Division 1111 Constitution Ave. Need to file state taxes only NW, IR-6526 Washington, DC 20224   We respond to many letters by telephone. Need to file state taxes only Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. Need to file state taxes only   You can send your comments from www. Need to file state taxes only irs. Need to file state taxes only gov/formspubs. Need to file state taxes only Click on “More Information” and then on “Comment on Tax Forms and Publications. Need to file state taxes only ”   Although we cannot respond individually to each comment received, we do appreciate your feedback and will consider your comments as we revise our tax products. Need to file state taxes only Ordering forms and publications. Need to file state taxes only   Visit www. Need to file state taxes only irs. Need to file state taxes only gov/formspubs to download forms and publications, call 1-800-TAX-FORM (1-800-829-3676), or write to the address below and receive a response within 10 days after your request is received. Need to file state taxes only Internal Revenue Service 1201 N. Need to file state taxes only Mitsubishi Motorway Bloomington, IL 61705-6613 Tax questions. Need to file state taxes only   If you have a tax question, check the information available on IRS. Need to file state taxes only gov or call 1-800-829-1040. Need to file state taxes only We cannot answer tax questions sent to either of the above addresses. Need to file state taxes only Prev  Up  Next   Home   More Online Publications
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The Need To File State Taxes Only

Need to file state taxes only 4. Need to file state taxes only   Foreign Earned Income and Housing: Exclusion – Deduction Table of Contents Topics - This chapter discusses: Useful Items - You may want to see: Who Qualifies for the Exclusions and the Deduction? RequirementsTax Home in Foreign Country Bona Fide Residence Test Physical Presence Test Waiver of Time Requirements U. Need to file state taxes only S. Need to file state taxes only Travel Restrictions Foreign Earned Income Foreign Earned Income ExclusionLimit on Excludable Amount Choosing the Exclusion Foreign Housing Exclusion and DeductionHousing Amount Foreign Housing Exclusion Foreign Housing Deduction Married Couples Form 2555 and Form 2555-EZForm 2555-EZ Form 2555 Topics - This chapter discusses: Who qualifies for the foreign earned income exclusion, the foreign housing exclusion, and the foreign housing deduction, The requirements that must be met to claim either exclusion or the deduction, How to figure the foreign earned income exclusion, and How to figure the foreign housing exclusion and the foreign housing deduction. Need to file state taxes only Useful Items - You may want to see: Publication 519 U. Need to file state taxes only S. Need to file state taxes only Tax Guide for Aliens 570 Tax Guide for Individuals With Income from U. Need to file state taxes only S. Need to file state taxes only Possessions 596 Earned Income Credit (EIC) Form (and Instructions) 1040X Amended U. Need to file state taxes only S. Need to file state taxes only Individual Income Tax Return 2555 Foreign Earned Income 2555-EZ Foreign Earned Income Exclusion See chapter 7 for information about getting these publications and forms. Need to file state taxes only Who Qualifies for the Exclusions and the Deduction? If you meet certain requirements, you may qualify for the foreign earned income and foreign housing exclusions and the foreign housing deduction. Need to file state taxes only If you are a U. Need to file state taxes only S. Need to file state taxes only citizen or a resident alien of the United States and you live abroad, you are taxed on your worldwide income. Need to file state taxes only However, you may qualify to exclude from income up to $97,600 of your foreign earnings. Need to file state taxes only In addition, you can exclude or deduct certain foreign housing amounts. Need to file state taxes only See Foreign Earned Income Exclusion and Foreign Housing Exclusion and Deduction, later. Need to file state taxes only You also may be entitled to exclude from income the value of meals and lodging provided to you by your employer. Need to file state taxes only See Exclusion of Meals and Lodging, later. Need to file state taxes only Requirements To claim the foreign earned income exclusion, the foreign housing exclusion, or the foreign housing deduction, you must meet all three of the following requirements. Need to file state taxes only Your tax home must be in a foreign country. Need to file state taxes only You must have foreign earned income. Need to file state taxes only You must be one of the following. Need to file state taxes only A U. Need to file state taxes only S. Need to file state taxes only citizen who is a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year. Need to file state taxes only A U. Need to file state taxes only S. Need to file state taxes only resident alien who is a citizen or national of a country with which the United States has an income tax treaty in effect and who is a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year. Need to file state taxes only A U. Need to file state taxes only S. Need to file state taxes only citizen or a U. Need to file state taxes only S. Need to file state taxes only resident alien who is physically present in a foreign country or countries for at least 330 full days during any period of 12 consecutive months. Need to file state taxes only See Publication 519 to find out if you are a U. Need to file state taxes only S. Need to file state taxes only resident alien for tax purposes and whether you keep that alien status when you temporarily work abroad. Need to file state taxes only If you are a nonresident alien married to a U. Need to file state taxes only S. Need to file state taxes only citizen or resident alien, and both you and your spouse choose to treat you as a resident alien, you are a resident alien for tax purposes. Need to file state taxes only For information on making the choice, see the discussion in chapter 1 under Nonresident Alien Spouse Treated as a Resident . Need to file state taxes only Waiver of minimum time requirements. Need to file state taxes only   The minimum time requirements for bona fide residence and physical presence can be waived if you must leave a foreign country because of war, civil unrest, or similar adverse conditions in that country. Need to file state taxes only This is fully explained under Waiver of Time Requirements , later. Need to file state taxes only   See Figure 4-A and information in this chapter to determine if you are eligible to claim either exclusion or the deduction. Need to file state taxes only Tax Home in Foreign Country To qualify for the foreign earned income exclusion, the foreign housing exclusion, or the foreign housing deduction, your tax home must be in a foreign country throughout your period of bona fide residence or physical presence abroad. Need to file state taxes only Bona fide residence and physical presence are explained later. Need to file state taxes only Tax Home Your tax home is the general area of your main place of business, employment, or post of duty, regardless of where you maintain your family home. Need to file state taxes only Your tax home is the place where you are permanently or indefinitely engaged to work as an employee or self-employed individual. Need to file state taxes only Having a “tax home” in a given location does not necessarily mean that the given location is your residence or domicile for tax purposes. Need to file state taxes only If you do not have a regular or main place of business because of the nature of your work, your tax home may be the place where you regularly live. Need to file state taxes only If you have neither a regular or main place of business nor a place where you regularly live, you are considered an itinerant and your tax home is wherever you work. Need to file state taxes only You are not considered to have a tax home in a foreign country for any period in which your abode is in the United States. Need to file state taxes only However, your abode is not necessarily in the United States while you are temporarily in the United States. Need to file state taxes only Your abode is also not necessarily in the United States merely because you maintain a dwelling in the United States, whether or not your spouse or dependents use the dwelling. Need to file state taxes only “Abode” has been variously defined as one's home, habitation, residence, domicile, or place of dwelling. Need to file state taxes only It does not mean your principal place of business. Need to file state taxes only “Abode” has a domestic rather than a vocational meaning and does not mean the same as “tax home. Need to file state taxes only ” The location of your abode often will depend on where you maintain your economic, family, and personal ties. Need to file state taxes only Example 1. Need to file state taxes only You are employed on an offshore oil rig in the territorial waters of a foreign country and work a 28-day on/28-day off schedule. Need to file state taxes only You return to your family residence in the United States during your off periods. Need to file state taxes only You are considered to have an abode in the United States and do not satisfy the tax home test in the foreign country. Need to file state taxes only You cannot claim either of the exclusions or the housing deduction. Need to file state taxes only Example 2. Need to file state taxes only For several years, you were a marketing executive with a producer of machine tools in Toledo, Ohio. Need to file state taxes only In November of last year, your employer transferred you to London, England, for a minimum of 18 months to set up a sales operation for Europe. Need to file state taxes only Before you left, you distributed business cards showing your business and home addresses in London. Need to file state taxes only You kept ownership of your home in Toledo but rented it to another family. Need to file state taxes only You placed your car in storage. Need to file state taxes only In November of last year, you moved your spouse, children, furniture, and family pets to a home your employer rented for you in London. Need to file state taxes only Shortly after moving, you leased a car and you and your spouse got British driving licenses. Need to file state taxes only Your entire family got library cards for the local public library. Need to file state taxes only You and your spouse opened bank accounts with a London bank and secured consumer credit. Need to file state taxes only You joined a local business league and both you and your spouse became active in the neighborhood civic association and worked with a local charity. Need to file state taxes only Your abode is in London for the time you live there. Need to file state taxes only You satisfy the tax home test in the foreign country. Need to file state taxes only Please click here for the text description of the image. Need to file state taxes only Figure 4–A Can I Claim the Exclusion or Deduction? Temporary or Indefinite Assignment The location of your tax home often depends on whether your assignment is temporary or indefinite. Need to file state taxes only If you are temporarily absent from your tax home in the United States on business, you may be able to deduct your away-from-home expenses (for travel, meals, and lodging), but you would not qualify for the foreign earned income exclusion. Need to file state taxes only If your new work assignment is for an indefinite period, your new place of employment becomes your tax home and you would not be able to deduct any of the related expenses that you have in the general area of this new work assignment. Need to file state taxes only If your new tax home is in a foreign country and you meet the other requirements, your earnings may qualify for the foreign earned income exclusion. Need to file state taxes only If you expect your employment away from home in a single location to last, and it does last, for 1 year or less, it is temporary unless facts and circumstances indicate otherwise. Need to file state taxes only If you expect it to last for more than 1 year, it is indefinite. Need to file state taxes only If you expect it to last for 1 year or less, but at some later date you expect it to last longer than 1 year, it is temporary (in the absence of facts and circumstances indicating otherwise) until your expectation changes. Need to file state taxes only Once your expectation changes, it is indefinite. Need to file state taxes only Foreign Country To meet the bona fide residence test or the physical presence test, you must live in or be present in a foreign country. Need to file state taxes only A foreign country includes any territory under the sovereignty of a government other than that of the United States. Need to file state taxes only The term “foreign country” includes the country's airspace and territorial waters, but not international waters and the airspace above them. Need to file state taxes only It also includes the seabed and subsoil of those submarine areas adjacent to the country's territorial waters over which it has exclusive rights under international law to explore and exploit the natural resources. Need to file state taxes only The term “foreign country” does not include Antarctica or U. Need to file state taxes only S. Need to file state taxes only possessions such as Puerto Rico, Guam, the Commonwealth of the Northern Mariana Islands, the U. Need to file state taxes only S. Need to file state taxes only Virgin Islands, and Johnston Island. Need to file state taxes only For purposes of the foreign earned income exclusion, the foreign housing exclusion, and the foreign housing deduction, the terms “foreign,” “abroad,” and “overseas” refer to areas outside the United States and those areas listed or described in the previous sentence. Need to file state taxes only American Samoa, Guam, and the Commonwealth of the Northern Mariana Islands Residence or presence in a U. Need to file state taxes only S. Need to file state taxes only possession does not qualify you for the foreign earned income exclusion. Need to file state taxes only You may, however, qualify for an exclusion of your possession income on your U. Need to file state taxes only S. Need to file state taxes only return. Need to file state taxes only American Samoa. Need to file state taxes only   There is a possession exclusion available to individuals who are bona fide residents of American Samoa for the entire tax year. Need to file state taxes only Gross income from sources within American Samoa may be eligible for this exclusion. Need to file state taxes only Income that is effectively connected with the conduct of a trade or business within American Samoa also may be eligible for this exclusion. Need to file state taxes only Use Form 4563, Exclusion of Income for Bona Fide Residents of American Samoa, to figure the exclusion. Need to file state taxes only Guam and the Commonwealth of the Northern Mariana Islands. Need to file state taxes only   An exclusion will be available to residents of Guam and the Commonwealth of the Northern Mariana Islands if, and when, new implementation agreements take effect between the United States and those possessions. Need to file state taxes only   For more information, see Publication 570. Need to file state taxes only Puerto Rico and U. Need to file state taxes only S. Need to file state taxes only Virgin Islands Residents of Puerto Rico and the U. Need to file state taxes only S. Need to file state taxes only Virgin Islands cannot claim the foreign earned income exclusion or the foreign housing exclusion. Need to file state taxes only Puerto Rico. Need to file state taxes only   Generally, if you are a U. Need to file state taxes only S. Need to file state taxes only citizen who is a bona fide resident of Puerto Rico for the entire tax year, you are not subject to U. Need to file state taxes only S. Need to file state taxes only tax on income from Puerto Rican sources. Need to file state taxes only This does not include amounts paid for services performed as an employee of the United States. Need to file state taxes only However, you are subject to U. Need to file state taxes only S. Need to file state taxes only tax on your income from sources outside Puerto Rico. Need to file state taxes only In figuring your U. Need to file state taxes only S. Need to file state taxes only tax, you cannot deduct expenses allocable to income not subject to tax. Need to file state taxes only Bona Fide Residence Test You meet the bona fide residence test if you are a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year. Need to file state taxes only You can use the bona fide residence test to qualify for the exclusions and the deduction only if you are either: A U. Need to file state taxes only S. Need to file state taxes only citizen, or A U. Need to file state taxes only S. Need to file state taxes only resident alien who is a citizen or national of a country with which the United States has an income tax treaty in effect. Need to file state taxes only You do not automatically acquire bona fide resident status merely by living in a foreign country or countries for 1 year. Need to file state taxes only If you go to a foreign country to work on a particular job for a specified period of time, you ordinarily will not be regarded as a bona fide resident of that country even though you work there for 1 tax year or longer. Need to file state taxes only The length of your stay and the nature of your job are only two of the factors to be considered in determining whether you meet the bona fide residence test. Need to file state taxes only Bona fide residence. Need to file state taxes only   To meet the bona fide residence test, you must have established a bona fide residence in a foreign country. Need to file state taxes only   Your bona fide residence is not necessarily the same as your domicile. Need to file state taxes only Your domicile is your permanent home, the place to which you always return or intend to return. Need to file state taxes only Example. Need to file state taxes only You could have your domicile in Cleveland, Ohio, and a bona fide residence in Edinburgh, Scotland, if you intend to return eventually to Cleveland. Need to file state taxes only The fact that you go to Scotland does not automatically make Scotland your bona fide residence. Need to file state taxes only If you go there as a tourist, or on a short business trip, and return to the United States, you have not established bona fide residence in Scotland. Need to file state taxes only But if you go to Scotland to work for an indefinite or extended period and you set up permanent quarters there for yourself and your family, you probably have established a bona fide residence in a foreign country, even though you intend to return eventually to the United States. Need to file state taxes only You are clearly not a resident of Scotland in the first instance. Need to file state taxes only However, in the second, you are a resident because your stay in Scotland appears to be permanent. Need to file state taxes only If your residency is not as clearly defined as either of these illustrations, it may be more difficult to decide whether you have established a bona fide residence. Need to file state taxes only Determination. Need to file state taxes only   Questions of bona fide residence are determined according to each individual case, taking into account factors such as your intention, the purpose of your trip, and the nature and length of your stay abroad. Need to file state taxes only   To meet the bona fide residence test, you must show the Internal Revenue Service (IRS) that you have been a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year. Need to file state taxes only The IRS decides whether you are a bona fide resident of a foreign country largely on the basis of facts you report on Form 2555. Need to file state taxes only IRS cannot make this determination until you file Form 2555. Need to file state taxes only Statement to foreign authorities. Need to file state taxes only   You are not considered a bona fide resident of a foreign country if you make a statement to the authorities of that country that you are not a resident of that country, and the authorities: Hold that you are not subject to their income tax laws as a resident, or Have not made a final decision on your status. Need to file state taxes only Special agreements and treaties. Need to file state taxes only   An income tax exemption provided in a treaty or other international agreement will not in itself prevent you from being a bona fide resident of a foreign country. Need to file state taxes only Whether a treaty prevents you from becoming a bona fide resident of a foreign country is determined under all provisions of the treaty, including specific provisions relating to residence or privileges and immunities. Need to file state taxes only Example 1. Need to file state taxes only You are a U. Need to file state taxes only S. Need to file state taxes only citizen employed in the United Kingdom by a U. Need to file state taxes only S. Need to file state taxes only employer under contract with the U. Need to file state taxes only S. Need to file state taxes only Armed Forces. Need to file state taxes only You are not subject to the North Atlantic Treaty Status of Forces Agreement. Need to file state taxes only You may be a bona fide resident of the United Kingdom. Need to file state taxes only Example 2. Need to file state taxes only You are a U. Need to file state taxes only S. Need to file state taxes only citizen in the United Kingdom who qualifies as an “employee” of an armed service or as a member of a “civilian component” under the North Atlantic Treaty Status of Forces Agreement. Need to file state taxes only You are not a bona fide resident of the United Kingdom. Need to file state taxes only Example 3. Need to file state taxes only You are a U. Need to file state taxes only S. Need to file state taxes only citizen employed in Japan by a U. Need to file state taxes only S. Need to file state taxes only employer under contract with the U. Need to file state taxes only S. Need to file state taxes only Armed Forces. Need to file state taxes only You are subject to the agreement of the Treaty of Mutual Cooperation and Security between the United States and Japan. Need to file state taxes only Being subject to the agreement does not make you a bona fide resident of Japan. Need to file state taxes only Example 4. Need to file state taxes only You are a U. Need to file state taxes only S. Need to file state taxes only citizen employed as an “official” by the United Nations in Switzerland. Need to file state taxes only You are exempt from Swiss taxation on the salary or wages paid to you by the United Nations. Need to file state taxes only This does not prevent you from being a bona fide resident of Switzerland. Need to file state taxes only Effect of voting by absentee ballot. Need to file state taxes only   If you are a U. Need to file state taxes only S. Need to file state taxes only citizen living abroad, you can vote by absentee ballot in any election held in the United States without risking your status as a bona fide resident of a foreign country. Need to file state taxes only   However, if you give information to the local election officials about the nature and length of your stay abroad that does not match the information you give for the bona fide residence test, the information given in connection with absentee voting will be considered in determining your status, but will not necessarily be conclusive. Need to file state taxes only Uninterrupted period including entire tax year. Need to file state taxes only   To meet the bona fide residence test, you must reside in a foreign country or countries for an uninterrupted period that includes an entire tax year. Need to file state taxes only An entire tax year is from January 1 through December 31 for taxpayers who file their income tax returns on a calendar year basis. Need to file state taxes only   During the period of bona fide residence in a foreign country, you can leave the country for brief or temporary trips back to the United States or elsewhere for vacation or business. Need to file state taxes only To keep your status as a bona fide resident of a foreign country, you must have a clear intention of returning from such trips, without unreasonable delay, to your foreign residence or to a new bona fide residence in another foreign country. Need to file state taxes only Example 1. Need to file state taxes only You arrived with your family in Lisbon, Portugal, on November 1, 2011. Need to file state taxes only Your assignment is indefinite, and you intend to live there with your family until your company sends you to a new post. Need to file state taxes only You immediately established residence there. Need to file state taxes only You spent April of 2012 at a business conference in the United States. Need to file state taxes only Your family stayed in Lisbon. Need to file state taxes only Immediately following the conference, you returned to Lisbon and continued living there. Need to file state taxes only On January 1, 2013, you completed an uninterrupted period of residence for a full tax year (2012), and you meet the bona fide residence test. Need to file state taxes only Example 2. Need to file state taxes only Assume the same facts as in Example 1, except that you transferred back to the United States on December 13, 2012. Need to file state taxes only You would not meet the bona fide residence test because your bona fide residence in the foreign country, although it lasted more than a year, did not include a full tax year. Need to file state taxes only You may, however, qualify for the foreign earned income exclusion or the housing exclusion or deduction under the physical presence test (discussed later). Need to file state taxes only Bona fide resident for part of a year. Need to file state taxes only   Once you have established bona fide residence in a foreign country for an uninterrupted period that includes an entire tax year, you are a bona fide resident of that country for the period starting with the date you actually began the residence and ending with the date you abandon the foreign residence. Need to file state taxes only Your period of bona fide residence can include an entire tax year plus parts of 2 other tax years. Need to file state taxes only Example. Need to file state taxes only You were a bona fide resident of Singapore from March 1, 2011, through September 14, 2013. Need to file state taxes only On September 15, 2013, you returned to the United States. Need to file state taxes only Since you were a bona fide resident of a foreign country for all of 2012, you were also a bona fide resident of a foreign country from March 1, 2011, through the end of 2011 and from January 1, 2013, through September 14, 2013. Need to file state taxes only Reassignment. Need to file state taxes only   If you are assigned from one foreign post to another, you may or may not have a break in foreign residence between your assignments, depending on the circumstances. Need to file state taxes only Example 1. Need to file state taxes only You were a resident of Pakistan from October 1, 2012, through November 30, 2013. Need to file state taxes only On December 1, 2013, you and your family returned to the United States to wait for an assignment to another foreign country. Need to file state taxes only Your household goods also were returned to the United States. Need to file state taxes only Your foreign residence ended on November 30, 2013, and did not begin again until after you were assigned to another foreign country and physically entered that country. Need to file state taxes only Since you were not a bona fide resident of a foreign country for the entire tax year of 2012 or 2013 you do not meet the bona fide residence test in either year. Need to file state taxes only You may, however, qualify for the foreign earned income exclusion or the housing exclusion or deduction under the physical presence test, discussed later. Need to file state taxes only Example 2. Need to file state taxes only Assume the same facts as in Example 1, except that upon completion of your assignment in Pakistan you were given a new assignment to Turkey. Need to file state taxes only On December 1, 2013, you and your family returned to the United States for a month's vacation. Need to file state taxes only On January 2, 2014, you arrived in Turkey for your new assignment. Need to file state taxes only Because you did not interrupt your bona fide residence abroad, you meet the bona fide residence test. Need to file state taxes only Physical Presence Test You meet the physical presence test if you are physically present in a foreign country or countries 330 full days during a period of 12 consecutive months. Need to file state taxes only The 330 days do not have to be consecutive. Need to file state taxes only Any U. Need to file state taxes only S. Need to file state taxes only citizen or resident alien can use the physical presence test to qualify for the exclusions and the deduction. Need to file state taxes only The physical presence test is based only on how long you stay in a foreign country or countries. Need to file state taxes only This test does not depend on the kind of residence you establish, your intentions about returning, or the nature and purpose of your stay abroad. Need to file state taxes only 330 full days. Need to file state taxes only   Generally, to meet the physical presence test, you must be physically present in a foreign country or countries for at least 330 full days during a 12-month period. Need to file state taxes only You can count days you spent abroad for any reason. Need to file state taxes only You do not have to be in a foreign country only for employment purposes. Need to file state taxes only You can be on vacation. Need to file state taxes only   You do not meet the physical presence test if illness, family problems, a vacation, or your employer's orders cause you to be present for less than the required amount of time. Need to file state taxes only Exception. Need to file state taxes only   You can be physically present in a foreign country or countries for less than 330 full days and still meet the physical presence test if you are required to leave a country because of war or civil unrest. Need to file state taxes only See Waiver of Time Requirements, later. Need to file state taxes only Full day. Need to file state taxes only   A full day is a period of 24 consecutive hours, beginning at midnight. Need to file state taxes only Travel. Need to file state taxes only    When you leave the United States to go directly to a foreign country or when you return directly to the United States from a foreign country, the time you spend on or over international waters does not count toward the 330-day total. Need to file state taxes only Example. Need to file state taxes only You leave the United States for France by air on June 10. Need to file state taxes only You arrive in France at 9:00 a. Need to file state taxes only m. Need to file state taxes only on June 11. Need to file state taxes only Your first full day of physical presence in France is June 12. Need to file state taxes only Passing over foreign country. Need to file state taxes only   If, in traveling from the United States to a foreign country, you pass over a foreign country before midnight of the day you leave, the first day you can count toward the 330-day total is the day following the day you leave the United States. Need to file state taxes only Example. Need to file state taxes only You leave the United States by air at 9:30 a. Need to file state taxes only m. Need to file state taxes only on June 10 to travel to Kenya. Need to file state taxes only You pass over western Africa at 11:00 p. Need to file state taxes only m. Need to file state taxes only on June 10 and arrive in Kenya at 12:30 a. Need to file state taxes only m. Need to file state taxes only on June 11. Need to file state taxes only Your first full day in a foreign country is June 11. Need to file state taxes only Change of location. Need to file state taxes only   You can move about from one place to another in a foreign country or to another foreign country without losing full days. Need to file state taxes only If any part of your travel is not within any foreign country and takes less than 24 hours, you are considered to be in a foreign country during that part of travel. Need to file state taxes only Example 1. Need to file state taxes only You leave Ireland by air at 11:00 p. Need to file state taxes only m. Need to file state taxes only on July 6 and arrive in Sweden at 5:00 a. Need to file state taxes only m. Need to file state taxes only on July 7. Need to file state taxes only Your trip takes less than 24 hours and you lose no full days. Need to file state taxes only Example 2. Need to file state taxes only You leave Norway by ship at 10:00 p. Need to file state taxes only m. Need to file state taxes only on July 6 and arrive in Portugal at 6:00 a. Need to file state taxes only m. Need to file state taxes only on July 8. Need to file state taxes only Since your travel is not within a foreign country or countries and the trip takes more than 24 hours, you lose as full days July 6, 7, and 8. Need to file state taxes only If you remain in Portugal, your next full day in a foreign country is July 9. Need to file state taxes only In United States while in transit. Need to file state taxes only   If you are in transit between two points outside the United States and are physically present in the United States for less than 24 hours, you are not treated as present in the United States during the transit. Need to file state taxes only You are treated as traveling over areas not within any foreign country. Need to file state taxes only    Please click here for the text description of the image. Need to file state taxes only Figure 4-B How to figure the 12-month period. Need to file state taxes only   There are four rules you should know when figuring the 12-month period. Need to file state taxes only Your 12-month period can begin with any day of the month. Need to file state taxes only It ends the day before the same calendar day, 12 months later. Need to file state taxes only Your 12-month period must be made up of consecutive months. Need to file state taxes only Any 12-month period can be used if the 330 days in a foreign country fall within that period. Need to file state taxes only You do not have to begin your 12-month period with your first full day in a foreign country or end it with the day you leave. Need to file state taxes only You can choose the 12-month period that gives you the greatest exclusion. Need to file state taxes only In determining whether the 12-month period falls within a longer stay in the foreign country, 12-month periods can overlap one another. Need to file state taxes only Example 1. Need to file state taxes only You are a construction worker who works on and off in a foreign country over a 20-month period. Need to file state taxes only You might pick up the 330 full days in a 12-month period only during the middle months of the time you work in the foreign country because the first few and last few months of the 20-month period are broken up by long visits to the United States. Need to file state taxes only Example 2. Need to file state taxes only You work in New Zealand for a 20-month period from January 1, 2012, through August 31, 2013, except that you spend 28 days in February 2012 and 28 days in February 2013 on vacation in the United States. Need to file state taxes only You are present in New Zealand for at least 330 full days during each of the following two 12-month periods: January 1, 2012 – December 31, 2012 and September 1, 2012 – August 31, 2013. Need to file state taxes only By overlapping the 12-month periods in this way, you meet the physical presence test for the whole 20-month period. Need to file state taxes only See Figure 4-B, on the previous page. Need to file state taxes only Waiver of Time Requirements Both the bona fide residence test and the physical presence test contain minimum time requirements. Need to file state taxes only The minimum time requirements can be waived, however, if you must leave a foreign country because of war, civil unrest, or similar adverse conditions in that country. Need to file state taxes only You must be able to show that you reasonably could have expected to meet the minimum time requirements if not for the adverse conditions. Need to file state taxes only To qualify for the waiver, you must actually have your tax home in the foreign country and be a bona fide resident of, or be physically present in, the foreign country on or before the beginning date of the waiver. Need to file state taxes only Early in 2014, the IRS will publish in the Internal Revenue Bulletin a list of the only countries that qualify for the waiver for 2013 and the effective dates. Need to file state taxes only If you left one of the countries on or after the date listed for each country, you can meet the bona fide residence test or physical presence test for 2013 without meeting the minimum time requirement. Need to file state taxes only However, in figuring your exclusion, the number of your qualifying days of bona fide residence or physical presence includes only days of actual residence or presence within the country. Need to file state taxes only U. Need to file state taxes only S. Need to file state taxes only Travel Restrictions If you are present in a foreign country in violation of U. Need to file state taxes only S. Need to file state taxes only law, you will not be treated as a bona fide resident of a foreign country or as physically present in a foreign country while you are in violation of the law. Need to file state taxes only Income that you earn from sources within such a country for services performed during a period of violation does not qualify as foreign earned income. Need to file state taxes only Your housing expenses within that country (or outside that country for housing your spouse or dependents) while you are in violation of the law cannot be included in figuring your foreign housing amount. Need to file state taxes only For 2013, the only country to which travel restrictions applied was Cuba. Need to file state taxes only The restrictions applied for the entire year. Need to file state taxes only However, individuals working at the U. Need to file state taxes only S. Need to file state taxes only Naval Base at Guantanamo Bay in Cuba are not in violation of U. Need to file state taxes only S. Need to file state taxes only law. Need to file state taxes only Personal service income earned by individuals at the base is eligible for the foreign earned income exclusion provided the other requirements are met. Need to file state taxes only Foreign Earned Income To claim the foreign earned income exclusion, the foreign housing exclusion, or the foreign housing deduction, you must have foreign earned income. Need to file state taxes only Foreign earned income generally is income you receive for services you perform during a period in which you meet both of the following requirements. Need to file state taxes only Your tax home is in a foreign country. Need to file state taxes only You meet either the bona fide residence test or the physical presence test. Need to file state taxes only To determine whether your tax home is in a foreign country, see Tax Home in Foreign Country, earlier. Need to file state taxes only To determine whether you meet either the bona fide residence test or the physical presence test, see Bona Fide Residence Test and Physical Presence Test, earlier. Need to file state taxes only Foreign earned income does not include the following amounts. Need to file state taxes only The value of meals and lodging that you exclude from your income because the meals and lodging were furnished for the convenience of your employer. Need to file state taxes only Pension or annuity payments you receive, including social security benefits (see Pensions and annuities, later). Need to file state taxes only Pay you receive as an employee of the U. Need to file state taxes only S. Need to file state taxes only Government. Need to file state taxes only (See U. Need to file state taxes only S. Need to file state taxes only Government Employees, later. Need to file state taxes only ) Amounts you include in your income because of your employer's contributions to a nonexempt employee trust or to a nonqualified annuity contract. Need to file state taxes only Any unallowable moving expense deduction that you choose to recapture as explained under Moving Expense Attributable to Foreign Earnings in 2 Years in chapter 5. Need to file state taxes only Payments you receive after the end of the tax year following the tax year in which you performed the services that earned the income. Need to file state taxes only Earned income. Need to file state taxes only   This is pay for personal services performed, such as wages, salaries, or professional fees. Need to file state taxes only The list that follows classifies many types of income into three categories. Need to file state taxes only The column headed Variable Income lists income that may fall into either the earned income category, the unearned income category, or partly into both. Need to file state taxes only For more information on earned and unearned income, see Earned and Unearned Income, later. Need to file state taxes only Earned Income Unearned Income Variable Income Salaries and wages Dividends Business profits Commissions Interest Royalties Bonuses Capital gains Rents Professional fees Gambling winnings Scholarships and fellowships Tips Alimony     Social security benefits     Pensions     Annuities     In addition to the types of earned income listed, certain noncash income and allowances or reimbursements are considered earned income. Need to file state taxes only Noncash income. Need to file state taxes only   The fair market value of property or facilities provided to you by your employer in the form of lodging, meals, or use of a car is earned income. Need to file state taxes only Allowances or reimbursements. Need to file state taxes only   Earned income includes allowances or reimbursements you receive, such as the following amounts. Need to file state taxes only    Cost-of-living allowances. Need to file state taxes only Overseas differential. Need to file state taxes only Family allowance. Need to file state taxes only Reimbursement for education or education allowance. Need to file state taxes only Home leave allowance. Need to file state taxes only Quarters allowance. Need to file state taxes only Reimbursement for moving or moving allowance (unless excluded from income as discussed later in Reimbursement of employee expenses under Earned and Unearned Income). Need to file state taxes only Source of Earned Income The source of your earned income is the place where you perform the services for which you received the income. Need to file state taxes only Foreign earned income is income you receive for working in a foreign country. Need to file state taxes only Where or how you are paid has no effect on the source of the income. Need to file state taxes only For example, income you receive for work done in Austria is income from a foreign source even if the income is paid directly to your bank account in the United States and your employer is located in New York City. Need to file state taxes only Example. Need to file state taxes only You are a U. Need to file state taxes only S. Need to file state taxes only citizen, a bona fide resident of Canada, and working as a mining engineer. Need to file state taxes only Your salary is $76,800 per year. Need to file state taxes only You also receive a $6,000 cost-of-living allowance, and a $6,000 education allowance. Need to file state taxes only Your employment contract did not indicate that you were entitled to these allowances only while outside the United States. Need to file state taxes only Your total income is $88,800. Need to file state taxes only You work a 5-day week, Monday through Friday. Need to file state taxes only After subtracting your vacation, you have a total of 240 workdays in the year. Need to file state taxes only You worked in the United States during the year for 6 weeks (30 workdays). Need to file state taxes only The following shows how to figure the part of your income that is for work done in Canada during the year. Need to file state taxes only   Number of days worked in Canada during the year (210) × Total income ($88,800) = $77,700     Number of days of work during the year for which payment was made (240)   Your foreign source earned income is $77,700. Need to file state taxes only Earned and Unearned Income Earned income was defined earlier as pay for personal services performed. Need to file state taxes only Some types of income are not easily identified as earned or unearned income. Need to file state taxes only Some of these types of income are further explained here. Need to file state taxes only Income from a sole proprietorship or partnership. Need to file state taxes only   Income from a business in which capital investment is an important part of producing the income may be unearned income. Need to file state taxes only If you are a sole proprietor or partner and your personal services are also an important part of producing the income, the part of the income that represents the value of your personal services will be treated as earned income. Need to file state taxes only Capital a factor. Need to file state taxes only   If capital investment is an important part of producing income, no more than 30% of your share of the net profits of the business is earned income. Need to file state taxes only   If you have no net profits, the part of your gross profit that represents a reasonable allowance for personal services actually performed is considered earned income. Need to file state taxes only Because you do not have a net profit, the 30% limit does not apply. Need to file state taxes only Example 1. Need to file state taxes only You are a U. Need to file state taxes only S. Need to file state taxes only citizen and meet the bona fide residence test. Need to file state taxes only You invest in a partnership based in Cameroon that is engaged solely in selling merchandise outside the United States. Need to file state taxes only You perform no services for the partnership. Need to file state taxes only At the end of the tax year, your share of the net profits is $80,000. Need to file state taxes only The entire $80,000 is unearned income. Need to file state taxes only Example 2. Need to file state taxes only Assume that in Example 1 you spend time operating the business. Need to file state taxes only Your share of the net profits is $80,000; 30% of your share of the profits is $24,000. Need to file state taxes only If the value of your services for the year is $15,000, your earned income is limited to the value of your services, $15,000. Need to file state taxes only Capital not a factor. Need to file state taxes only   If capital is not an income-producing factor and personal services produce the business income, the 30% rule does not apply. Need to file state taxes only The entire amount of business income is earned income. Need to file state taxes only Example. Need to file state taxes only You and Lou Green are management consultants and operate as equal partners in performing services outside the United States. Need to file state taxes only Because capital is not an income- producing factor, all the income from the partnership is considered earned income. Need to file state taxes only Income from a corporation. Need to file state taxes only   The salary you receive from a corporation is earned income only if it represents a reasonable allowance as compensation for work you do for the corporation. Need to file state taxes only Any amount over what is considered a reasonable salary is unearned income. Need to file state taxes only Example 1. Need to file state taxes only You are a U. Need to file state taxes only S. Need to file state taxes only citizen and an officer and stockholder of a corporation in Honduras. Need to file state taxes only You perform no work or service of any kind for the corporation. Need to file state taxes only During the tax year you receive a $10,000 “salary” from the corporation. Need to file state taxes only The $10,000 clearly is not for personal services and is unearned income. Need to file state taxes only Example 2. Need to file state taxes only You are a U. Need to file state taxes only S. Need to file state taxes only citizen and work full time as secretary-treasurer of your corporation. Need to file state taxes only During the tax year you receive $100,000 as salary from the corporation. Need to file state taxes only If $80,000 is a reasonable allowance as pay for the work you did, then $80,000 is earned income. Need to file state taxes only Stock options. Need to file state taxes only   You may have earned income if you disposed of stock that you got by exercising a stock option granted to you under an employee stock purchase plan. Need to file state taxes only   If your gain on the disposition of stock you got by exercising an option is treated as capital gain, your gain is unearned income. Need to file state taxes only   However, if you disposed of the stock less than 2 years after you were granted the option or less than 1 year after you got the stock, part of the gain on the disposition may be earned income. Need to file state taxes only It is considered received in the year you disposed of the stock and earned in the year you performed the services for which you were granted the option. Need to file state taxes only Any part of the earned income that is due to work you did outside the United States is foreign earned income. Need to file state taxes only   See Publication 525, Taxable and Nontaxable Income, for a discussion of the treatment of stock options. Need to file state taxes only Pensions and annuities. Need to file state taxes only    For purposes of the foreign earned income exclusion, the foreign housing exclusion, and the foreign housing deduction, amounts received as pensions or annuities are unearned income. Need to file state taxes only Royalties. Need to file state taxes only   Royalties from the leasing of oil and mineral lands and patents generally are a form of rent or dividends and are unearned income. Need to file state taxes only   Royalties received by a writer are earned income if they are received: For the transfer of property rights of the writer in the writer's product, or Under a contract to write a book or series of articles. Need to file state taxes only Rental income. Need to file state taxes only   Generally, rental income is unearned income. Need to file state taxes only If you perform personal services in connection with the production of rent, up to 30% of your net rental income can be considered earned income. Need to file state taxes only Example. Need to file state taxes only Larry Smith, a U. Need to file state taxes only S. Need to file state taxes only citizen living in Australia, owns and operates a rooming house in Sydney. Need to file state taxes only If he is operating the rooming house as a business that requires capital and personal services, he can consider up to 30% of net rental income as earned income. Need to file state taxes only On the other hand, if he just owns the rooming house and performs no personal services connected with its operation, except perhaps making minor repairs and collecting rents, none of his net income from the house is considered earned income. Need to file state taxes only It is all unearned income. Need to file state taxes only Professional fees. Need to file state taxes only   If you are engaged in a professional occupation (such as a doctor or lawyer), all fees received in the performance of these services are earned income. Need to file state taxes only Income of an artist. Need to file state taxes only   Income you receive from the sale of paintings you created is earned income. Need to file state taxes only Scholarships and fellowships. Need to file state taxes only   Any portion of a scholarship or fellowship grant that is paid to you for teaching, research or other services is considered earned income if you must include it in your gross income. Need to file state taxes only If the payer of the grant is required to provide you with a Form W-2, Wage and Tax Statement, these amounts will be listed as wages. Need to file state taxes only    Certain scholarship and fellowship income may be exempt under other provisions. Need to file state taxes only See Publication 970, Tax Benefits for Education, chapter 1. Need to file state taxes only Use of employer's property or facilities. Need to file state taxes only   If you receive fringe benefits in the form of the right to use your employer's property or facilities, the fair market value of that right is earned income. Need to file state taxes only Fair market value is the price at which the property would change hands between a willing buyer and a willing seller, neither being required to buy or sell, and both having reasonable knowledge of all the necessary facts. Need to file state taxes only Example. Need to file state taxes only You are privately employed and live in Japan all year. Need to file state taxes only You are paid a salary of $6,000 a month. Need to file state taxes only You live rent-free in a house provided by your employer that has a fair rental value of $3,000 a month. Need to file state taxes only The house is not provided for your employer's convenience. Need to file state taxes only You report on the calendar-year, cash basis. Need to file state taxes only You received $72,000 salary from foreign sources plus $36,000 fair rental value of the house, or a total of $108,000 of earned income. Need to file state taxes only Reimbursement of employee expenses. Need to file state taxes only   If you are reimbursed under an accountable plan (defined below) for expenses you incur on your employer's behalf and you have adequately accounted to your employer for the expenses, do not include the reimbursement for those expenses in your earned income. Need to file state taxes only   The expenses for which you are reimbursed are not considered allocable (related) to your earned income. Need to file state taxes only If expenses and reimbursement are equal, there is nothing to allocate to excluded income. Need to file state taxes only If expenses are more than the reimbursement, the unreimbursed expenses are considered to have been incurred in producing earned income and must be divided between your excluded and included income in determining the amount of unreimbursed expenses you can deduct. Need to file state taxes only (See chapter 5. Need to file state taxes only ) If the reimbursement is more than the expenses, no expenses remain to be divided between excluded and included income and the excess reimbursement must be included in earned income. Need to file state taxes only   These rules do not apply to the following individuals. Need to file state taxes only Straight-commission salespersons. Need to file state taxes only Employees who have arrangements with their employers under which taxes are not withheld on a percentage of the commissions because the employers consider that percentage to be attributable to the employees' expenses. Need to file state taxes only Accountable plan. Need to file state taxes only   An accountable plan is a reimbursement or allowance arrangement that includes all three of the following rules. Need to file state taxes only The expenses covered under the plan must have a business connection. Need to file state taxes only The employee must adequately account to the employer for these expenses within a reasonable period of time. Need to file state taxes only The employee must return any excess reimbursement or allowance within a reasonable period of time. Need to file state taxes only Reimbursement of moving expenses. Need to file state taxes only   Reimbursement of moving expenses may be earned income. Need to file state taxes only You must include as earned income: Any reimbursements of, or payments for, nondeductible moving expenses, Reimbursements that are more than your deductible expenses and that you do not return to your employer, Any reimbursements made (or treated as made) under a nonaccountable plan (any plan that does not meet the rules listed above for an accountable plan), even if they are for deductible expenses, and Any reimbursement of moving expenses you deducted in an earlier year. Need to file state taxes only This section discusses reimbursements that must be included in earned income. Need to file state taxes only Publication 521, Moving Expenses, discusses additional rules that apply to moving expense deductions and reimbursements. Need to file state taxes only   The rules for determining when the reimbursement is considered earned or where the reimbursement is considered earned may differ somewhat from the general rules previously discussed. Need to file state taxes only   Although you receive the reimbursement in one tax year, it may be considered earned for services performed, or to be performed, in another tax year. Need to file state taxes only You must report the reimbursement as income on your return in the year you receive it, even if it is considered earned during a different year. Need to file state taxes only Move from U. Need to file state taxes only S. Need to file state taxes only to foreign country. Need to file state taxes only   If you move from the United States to a foreign country, your moving expense reimbursement is generally considered pay for future services to be performed at the new location. Need to file state taxes only The reimbursement is considered earned solely in the year of the move if you qualify for the exclusion for a period that includes at least 120 days during that tax year. Need to file state taxes only   If you are neither a bona fide resident of nor physically present in a foreign country or countries for a period that includes 120 days during the year of the move, a portion of the reimbursement is considered earned in the year of the move and a portion is considered earned in the year following the year of the move. Need to file state taxes only To figure the amount earned in the year of the move, multiply the reimbursement by a fraction. Need to file state taxes only The numerator (top number) is the number of days in your qualifying period that fall within the year of the move, and the denominator (bottom number) is the total number of days in the year of the move. Need to file state taxes only   The difference between the total reimbursement and the amount considered earned in the year of the move is the amount considered earned in the year following the year of the move. Need to file state taxes only The part earned in each year is figured as shown in the following example. Need to file state taxes only Example. Need to file state taxes only You are a U. Need to file state taxes only S. Need to file state taxes only citizen working in the United States. Need to file state taxes only You were told in October 2012 that you were being transferred to a foreign country. Need to file state taxes only You arrived in the foreign country on December 15, 2012, and you are a bona fide resident for the remainder of 2012 and all of 2013. Need to file state taxes only Your employer reimbursed you $2,000 in January 2013 for the part of the moving expense that you were not allowed to deduct. Need to file state taxes only Because you did not qualify for the exclusion under the bona fide residence test for at least 120 days in 2012 (the year of the move), the reimbursement is considered pay for services performed in the foreign country for both 2012 and 2013. Need to file state taxes only You figure the part of the reimbursement for services performed in the foreign country in 2012 by multiplying the total reimbursement by a fraction. Need to file state taxes only The fraction is the number of days during which you were a bona fide resident in 2012 (the year of the move) divided by 366. Need to file state taxes only The remaining part of the reimbursement is for services performed in the foreign country in 2013. Need to file state taxes only This computation is used only to determine when the reimbursement is considered earned. Need to file state taxes only You would include the amount of the reimbursement in income in 2013, the year you received it. Need to file state taxes only Move between foreign countries. Need to file state taxes only   If you move between foreign countries, any moving expense reimbursement that you must include in income will be considered earned in the year of the move if you qualify for the foreign earned income exclusion for a period that includes at least 120 days in the year of the move. Need to file state taxes only Move to U. Need to file state taxes only S. Need to file state taxes only   If you move to the United States, the moving expense reimbursement that you must include in income is generally considered to be U. Need to file state taxes only S. Need to file state taxes only source income. Need to file state taxes only   However, if under either an agreement between you and your employer or a statement of company policy that is reduced to writing before your move to the foreign country, your employer will reimburse you for your move back to the United States regardless of whether you continue to work for the employer, the includible reimbursement is considered compensation for past services performed in the foreign country. Need to file state taxes only The includible reimbursement is considered earned in the year of the move if you qualify for the foreign earned income exclusion for a period that includes at least 120 days during that year. Need to file state taxes only Otherwise, you treat the includible reimbursement as received for services performed in the foreign country in the year of the move and the year immediately before the year of the move. Need to file state taxes only   See the discussion under Move from U. Need to file state taxes only S. Need to file state taxes only to foreign country , earlier, to figure the amount of the includible reimbursement considered earned in the year of the move. Need to file state taxes only The amount earned in the year before the year of the move is the difference between the total includible reimbursement and the amount earned in the year of the move. Need to file state taxes only Example. Need to file state taxes only You are a U. Need to file state taxes only S. Need to file state taxes only citizen employed in a foreign country. Need to file state taxes only You retired from employment with your employer on March 31, 2013, and returned to the United States after having been a bona fide resident of the foreign country for several years. Need to file state taxes only A written agreement with your employer entered into before you went abroad provided that you would be reimbursed for your move back to the United States. Need to file state taxes only In April 2013, your former employer reimbursed you $4,000 for the part of the cost of your move back to the United States that you were not allowed to deduct. Need to file state taxes only Because you were not a bona fide resident of a foreign country or countries for a period that included at least 120 days in 2013 (the year of the move), the includible reimbursement is considered pay for services performed in the foreign country for both 2013 and 2012. Need to file state taxes only You figure the part of the moving expense reimbursement for services performed in the foreign country for 2013 by multiplying the total includible reimbursement by a fraction. Need to file state taxes only The fraction is the number of days of foreign residence during the year (90) divided by the number of days in the year (365). Need to file state taxes only The remaining part of the includible reimbursement is for services performed in the foreign country in 2012. Need to file state taxes only You report the amount of the includible reimbursement in 2013, the year you received it. Need to file state taxes only    In this example, if you met the physical presence test for a period that included at least 120 days in 2013, the moving expense reimbursement would be considered earned entirely in the year of the move. Need to file state taxes only Storage expense reimbursements. Need to file state taxes only   If you are reimbursed for storage expenses, the reimbursement is for services you perform during the period of time for which the storage expenses are incurred. Need to file state taxes only U. Need to file state taxes only S. Need to file state taxes only Government Employees For purposes of the foreign earned income exclusion, the foreign housing exclusion, and the foreign housing deduction, foreign earned income does not include any amounts paid by the United States or any of its agencies to its employees. Need to file state taxes only This includes amounts paid from both appropriated and nonappropriated funds. Need to file state taxes only The following organizations (and other organizations similarly organized and operated under United States Army, Navy, or Air Force regulations) are integral parts of the Armed Forces, agencies, or instrumentalities of the United States. Need to file state taxes only United States Armed Forces exchanges. Need to file state taxes only Commissioned and noncommissioned officers' messes. Need to file state taxes only Armed Forces motion picture services. Need to file state taxes only Kindergartens on foreign Armed Forces installations. Need to file state taxes only Amounts paid by the United States or its agencies to persons who are not their employees may qualify for exclusion or deduction. Need to file state taxes only If you are a U. Need to file state taxes only S. Need to file state taxes only Government employee paid by a U. Need to file state taxes only S. Need to file state taxes only agency that assigned you to a foreign government to perform specific services for which the agency is reimbursed by the foreign government, your pay is from the U. Need to file state taxes only S. Need to file state taxes only Government and does not qualify for exclusion or deduction. Need to file state taxes only If you have questions about whether you are an employee or an independent contractor, get Publication 15-A, Employer's Supplemental Tax Guide. Need to file state taxes only American Institute in Taiwan. Need to file state taxes only   Amounts paid by the American Institute in Taiwan are not foreign earned income for purposes of the foreign earned income exclusion, the foreign housing exclusion, or the foreign housing deduction. Need to file state taxes only If you are an employee of the American Institute in Taiwan, allowances you receive are exempt from U. Need to file state taxes only S. Need to file state taxes only tax up to the amount that equals tax-exempt allowances received by civilian employees of the U. Need to file state taxes only S. Need to file state taxes only Government. Need to file state taxes only Allowances. Need to file state taxes only   Cost-of-living and foreign-area allowances paid under certain acts of Congress to U. Need to file state taxes only S. Need to file state taxes only civilian officers and employees stationed in Alaska and Hawaii or elsewhere outside the 48 contiguous states and the District of Columbia can be excluded from gross income. Need to file state taxes only Post differentials are wages that must be included in gross income, regardless of the act of Congress under which they are paid. Need to file state taxes only More information. Need to file state taxes only   Publication 516, U. Need to file state taxes only S. Need to file state taxes only Government Civilian Employees Stationed Abroad, has more information for U. Need to file state taxes only S. Need to file state taxes only Government employees abroad. Need to file state taxes only Exclusion of Meals and Lodging You do not include in your income the value of meals and lodging provided to you and your family by your employer at no charge if the following conditions are met. Need to file state taxes only The meals are furnished: On the business premises of your employer, and For the convenience of your employer. Need to file state taxes only The lodging is furnished: On the business premises of your employer, For the convenience of your employer, and As a condition of your employment. Need to file state taxes only If these conditions are met, do not include the value of the meals or lodging in your income, even if a law or your employment contract says that they are provided as compensation. Need to file state taxes only Amounts you do not include in income because of these rules are not foreign earned income. Need to file state taxes only If you receive a Form W-2, excludable amounts should not be included in the total reported in box 1 as wages. Need to file state taxes only Family. Need to file state taxes only   Your family, for this purpose, includes only your spouse and your dependents. Need to file state taxes only Lodging. Need to file state taxes only   The value of lodging includes the cost of heat, electricity, gas, water, sewer service, and similar items needed to make the lodging fit to live in. Need to file state taxes only Business premises of employer. Need to file state taxes only   Generally, the business premises of your employer is wherever you work. Need to file state taxes only For example, if you work as a housekeeper, meals and lodging provided in your employer's home are provided on the business premises of your employer. Need to file state taxes only Similarly, meals provided to cowhands while herding cattle on land leased or owned by their employer are considered provided on the premises of their employer. Need to file state taxes only Convenience of employer. Need to file state taxes only   Whether meals or lodging are provided for your employer's convenience must be determined from all the facts and circumstances. Need to file state taxes only Meals furnished at no charge are considered provided for your employer's convenience if there is a good business reason for providing them, other than to give you more pay. Need to file state taxes only   On the other hand, if your employer provides meals to you or your family as a means of giving you more pay, and there is no other business reason for providing them, their value is extra income to you because they are not furnished for the convenience of your employer. Need to file state taxes only Condition of employment. Need to file state taxes only   Lodging is provided as a condition of employment if you must accept the lodging to properly carry out the duties of your job. Need to file state taxes only You must accept lodging to properly carry out your duties if, for example, you must be available for duty at all times or you could not perform your duties if the lodging was not furnished. Need to file state taxes only Foreign camps. Need to file state taxes only   If the lodging is in a camp located in a foreign country, the camp is considered part of your employer's business premises. Need to file state taxes only The camp must be: Provided for your employer's convenience because the place where you work is in a remote area where satisfactory housing is not available to you on the open market within a reasonable commuting distance, Located as close as reasonably possible in the area where you work, and Provided in a common area or enclave that is not available to the general public for lodging or accommodations and that normally houses at least ten employees. Need to file state taxes only Foreign Earned Income Exclusion If your tax home is in a foreign country and you meet the bona fide residence test or the physical presence test, you can choose to exclude from your income a limited amount of your foreign earned income. Need to file state taxes only Foreign earned income was defined earlier in this chapter. Need to file state taxes only You also can choose to exclude from your income a foreign housing amount. Need to file state taxes only This is explained later under Foreign Housing Exclusion. Need to file state taxes only If you choose to exclude a foreign housing amount, you must figure the foreign housing exclusion before you figure the foreign earned income exclusion. Need to file state taxes only Your foreign earned income exclusion is limited to your foreign earned income minus your foreign housing exclusion. Need to file state taxes only If you choose to exclude foreign earned income, you cannot deduct, exclude, or claim a credit for any item that can be allocated to or charged against the excluded amounts. Need to file state taxes only This includes any expenses, losses, and other normally deductible items allocable to the excluded income. Need to file state taxes only For more information about deductions and credits, see chapter 5 . Need to file state taxes only Limit on Excludable Amount You may be able to exclude up to $97,600 of your foreign earned income in 2013. Need to file state taxes only You cannot exclude more than the smaller of: $97,600, or Your foreign earned income (discussed earlier) for the tax year minus your foreign housing exclusion (discussed later). Need to file state taxes only If both you and your spouse work abroad and each of you meets either the bona fide residence test or the physical presence test, you can each choose the foreign earned income exclusion. Need to file state taxes only You do not both need to meet the same test. Need to file state taxes only Together, you and your spouse can exclude as much as $195,200. Need to file state taxes only Paid in year following work. Need to file state taxes only   Generally, you are considered to have earned income in the year in which you do the work for which you receive the income, even if you work in one year but are not paid until the following year. Need to file state taxes only If you report your income on a cash basis, you report the income on your return for the year you receive it. Need to file state taxes only If you work one year, but are not paid for that work until the next year, the amount you can exclude in the year you are paid is the amount you could have excluded in the year you did the work if you had been paid in that year. Need to file state taxes only For an exception to this general rule, see Year-end payroll period, later. Need to file state taxes only Example. Need to file state taxes only You were a bona fide resident of Brazil for all of 2012 and 2013. Need to file state taxes only You report your income on the cash basis. Need to file state taxes only In 2012, you were paid $84,200 for work you did in Brazil during that year. Need to file state taxes only You excluded all of the $84,200 from your income in 2012. Need to file state taxes only In 2013, you were paid $117,300 for your work in Brazil. Need to file state taxes only $18,800 was for work you did in 2012 and $98,500 was for work you did in 2013. Need to file state taxes only You can exclude $10,900 of the $18,800 from your income in 2013. Need to file state taxes only This is the $95,100 maximum exclusion in 2012 minus the $84,200 actually excluded that year. Need to file state taxes only You must include the remaining $7,900 in income in 2013 because you could not have excluded that income in 2012 if you had received it that year. Need to file state taxes only You can exclude $97,600 of the $98,500 you were paid for work you did in 2013 from your 2013 income. Need to file state taxes only Your total foreign earned income exclusion for 2013 is $108,500 ($10,900 for work you did in 2012 and $97,600 for work you did in 2013). Need to file state taxes only You would include in your 2013 income $8,800 ($7,900 for the work you did in 2012 and $900 for the work you did in 2013). Need to file state taxes only Year-end payroll period. Need to file state taxes only   There is an exception to the general rule that income is considered earned in the year you do the work for which you receive the income. Need to file state taxes only If you are a cash-basis taxpayer, any salary or wage payment you receive after the end of the year in which you do the work for which you receive the pay is considered earned entirely in the year you receive it if all four of the following apply. Need to file state taxes only The period for which the payment is made is a normal payroll period of your employer that regularly applies to you. Need to file state taxes only The payroll period includes the last day of your tax year (December 31 if you figure your taxes on a calendar-year basis). Need to file state taxes only The payroll period is not longer than 16 days. Need to file state taxes only The payday comes at the same time in relation to the payroll period that it would normally come and it comes before the end of the next payroll period. Need to file state taxes only Example. Need to file state taxes only You are paid twice a month. Need to file state taxes only For the normal payroll period that begins on the first of the month and ends on the fifteenth of the month, you are paid on the sixteenth day of the month. Need to file state taxes only For the normal payroll period that begins on the sixteenth of the month and ends on the last day of the month, you are paid on the first day of the following month. Need to file state taxes only Because all of the above conditions are met, the pay you received on January 1, 2013, is considered earned in 2013. Need to file state taxes only Income earned over more than 1 year. Need to file state taxes only   Regardless of when you actually receive income, you must apply it to the year in which you earned it in figuring your excludable amount for that year. Need to file state taxes only For example, a bonus may be based on work you did over several years. Need to file state taxes only You determine the amount of the bonus that is considered earned in a particular year in two steps. Need to file state taxes only Divide the bonus by the number of calendar months in the period when you did the work that resulted in the bonus. Need to file state taxes only Multiply the result of (1) by the number of months you did the work during the year. Need to file state taxes only This is the amount that is subject to the exclusion limit for that tax year. Need to file state taxes only Income received more than 1 year after it was earned. Need to file state taxes only   You cannot exclude income you receive after the end of the year following the year you do the work to earn it. Need to file state taxes only Example. Need to file state taxes only   You were a bona fide resident of Sweden for 2011, 2012, and 2013. Need to file state taxes only You report your income on the cash basis. Need to file state taxes only In 2011, you were paid $69,000 for work you did in Sweden that year and in 2012 you were paid $74,000 for that year's work in Sweden. Need to file state taxes only You excluded all the income on your 2011 and 2012 returns. Need to file state taxes only   In 2013, you were paid $92,000; $82,000 for your work in Sweden during 2013, and $10,000 for work you did in Sweden in 2011. Need to file state taxes only You cannot exclude any of the $10,000 for work done in 2011 because you received it after the end of the year following the year in which you earned it. Need to file state taxes only You must include the $10,000 in income. Need to file state taxes only You can exclude all of the $82,000 received for work you did in 2013. Need to file state taxes only Community income. Need to file state taxes only   The maximum exclusion applies separately to the earnings of spouses. Need to file state taxes only Ignore any community property laws when you figure your limit on the foreign earned income exclusion. Need to file state taxes only Part-year exclusion. Need to file state taxes only   If the period for which you qualify for the foreign earned income exclusion includes only part of the year, you must adjust the maximum limit based on the number of qualifying days in the year. Need to file state taxes only The number of qualifying days is the number of days in the year within the period on which you both: Have your tax home in a foreign country, and Meet either the bona fide residence test or the physical presence test. Need to file state taxes only   For this purpose, you can count as qualifying days all days within a period of 12 consecutive months once you are physically present and have your tax home in a foreign country for 330 full days. Need to file state taxes only To figure your maximum exclusion, multiply the maximum excludable amount for the year by the number of your qualifying days in the year, and then divide the result by the number of days in the year. Need to file state taxes only Example. Need to file state taxes only You report your income on the calendar-year basis and you qualified for the foreign earned income exclusion under the bona fide residence test for 75 days in 2013. Need to file state taxes only You can exclude a maximum of 75/365 of $97,600, or $20,055, of your foreign earned income for 2013. Need to file state taxes only If you qualify under the bona fide residence test for all of 2014, you can exclude your foreign earned income up to the 2014 limit. Need to file state taxes only Physical presence test. Need to file state taxes only   Under the physical presence test, a 12-month period can be any period of 12 consecutive months that includes 330 full days. Need to file state taxes only If you qualify for the foreign earned income exclusion under the physical presence test for part of a year, it is important to carefully choose the 12-month period that will allow the maximum exclusion for that year. Need to file state taxes only Example. Need to file state taxes only You are physically present and have your tax home in a foreign country for a 16-month period from June 1, 2012, through September 30, 2013, except for 16 days in December 2012 when you were on vacation in the United States. Need to file state taxes only You figure the maximum exclusion for 2012 as follows. Need to file state taxes only Beginning with June 1, 2012, count forward 330 full days. Need to file state taxes only Do not count the 16 days you spent in the United States. Need to file state taxes only The 330th day, May 12, 2013, is the last day of a 12-month period. Need to file state taxes only Count backward 12 months from May 11, 2013, to find the first day of this 12-month period, May 12, 2012. Need to file state taxes only This 12-month period runs from May 12, 2012, through May 11, 2013. Need to file state taxes only Count the total days during 2012 that fall within this 12-month period. Need to file state taxes only This is 234 days (May 12, 2012 – December 31, 2012). Need to file state taxes only Multiply $95,100 (the maximum exclusion for 2012) by the fraction 234/366 to find your maximum exclusion for 2012 ($60,802). Need to file state taxes only You figure the maximum exclusion for 2013 in the opposite manner. Need to file state taxes only Beginning with your last full day, September 30, 2013, count backward 330 full days. Need to file state taxes only Do not count the 16 days you spent in the United States. Need to file state taxes only That day, October 20, 2012, is the first day of a 12-month period. Need to file state taxes only Count forward 12 months from October 20, 2012, to find the last day of this 12-month period, October 19, 2013. Need to file state taxes only This 12-month period runs from October 20, 2012, through October 19, 2013. Need to file state taxes only Count the total days during 2013 that fall within this 12-month period. Need to file state taxes only This is 292 days (January 1, 2013 – October 19, 2013). Need to file state taxes only Multiply $97,600, the maximum limit, by the fraction 292/365 to find your maximum exclusion for 2013 ($78,080). Need to file state taxes only Choosing the Exclusion The foreign earned income exclusion is voluntary. Need to file state taxes only You can choose the exclusion by completing the appropriate parts of Form 2555. Need to file state taxes only When You Can Choose the Exclusion Your initial choice of the exclusion on Form 2555 or Form 2555-EZ generally must be made with one of the following returns. Need to file state taxes only A return filed by the due date (including any extensions). Need to file state taxes only A return amending a timely-filed return. Need to file state taxes only Amended returns generally must be filed by the later of 3 years after the filing date of the original return or 2 years after the tax is paid. Need to file state taxes only A return filed within 1 year from the original due date of the return (determined without regard to any extensions). Need to file state taxes only Filing after the above periods. Need to file state taxes only   You can choose the exclusion on a return filed after the periods described above if you owe no federal income tax after taking into account the exclusion. Need to file state taxes only If you owe federal income tax after taking into account the exclusion, you can choose the exclusion on a return filed after the periods described earlier if you file before the IRS discovers that you failed to choose the exclusion. Need to file state taxes only Whether or not you owe federal income tax after taking the exclusion into account, if you file your return after the periods described earlier, you must type or legibly print at the top of the first page of the Form 1040 “Filed pursuant to section 1. Need to file state taxes only 911-7(a)(2)(i)(D). Need to file state taxes only ” If you owe federal income tax after taking into account the foreign earned income exclusion and the IRS discovered that you failed to choose the exclusion, you may still be able to choose the exclusion. Need to file state taxes only You must request a private letter ruling under Income Tax Regulation 301. Need to file state taxes only 9100-3 and Revenue Procedure 2013-1, 2013-1 I. Need to file state taxes only R. Need to file state taxes only B. Need to file state taxes only 1, available at www. Need to file state taxes only irs. Need to file state taxes only gov/irb/2013-01_IRB/ar06. Need to file state taxes only html. Need to file state taxes only Effect of Choosing the Exclusion Once you choose to exclude your foreign earned income, that choice remains in effect for that year and all later years unless you revoke it. Need to file state taxes only Foreign tax credit or deduction. Need to file state taxes only