You meet the physical presence test if you are physically present in a foreign country or countries 330 fulldays during any period of 12 consecutive months including some part of the year at issue. The 330 qualifying days do not have to be consecutive.
The physical presence test applies to both U.S. citizens and U.S. resident aliens and is based only on how long you stay in a foreign country or countries. This test does not depend on the kind of residence you establish, your intentions about returning to the United States, or the nature and purpose of your stay abroad. However, your intentions with regard to the nature and purpose of your stay abroad are relevant in determining whether you meet the tax home test, as explained under Chapter 4 of Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad.
330 Full Days
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 including some part of the year at issue. You can count days you spent abroad for any reason, so long as your tax home is in a foreign country.
You do not meet the physical presence test if you are not present in a foreign country or countries for at 330 full days in a 12-month period regardless of the reason for the failure, including illness, family problems, a vacation, or your employer's orders. Also, if you are present in a foreign country in violation of U.S. law, you will not be treated as physically present in a foreign country while you were in violation of the law. 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.
However, the minimum time requirement can be waived if you must leave a foreign country because of war, civil unrest, or similar adverse conditions in that country. Each year the IRS publishes a Revenue Procedure containing a list of countries for which the minimum time requirements are waived and the applicable date such waiver begins (visit IRS.gov and search “foreign earned income waiver”). You must be able to show that you reasonably could have expected to meet the minimum time requirements if not for the adverse conditions, that you had a tax home in the foreign country and were a bona fide resident of, or physically present in, the foreign country on or before the beginning date of the waiver.
A full day is a period of 24 consecutive hours, beginning and ending at midnight. You must spend the full day in a foreign country or countries for that day to be counted. When you leave the United States to go to a foreign country or when you return to the United States from a foreign country, the time you spend on or over international waters does not count as time in a foreign country.
You leave the United States for France by air on June 10. You arrive in France at 9:00 a.m. on June 11. Your first full day in France is June 12.
Passing Over Foreign Country
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.
You leave the United States by air at 9:30 a.m. on June 10 to travel to Spain. You pass over a part of France at 11:00 p.m. on June 10 and arrive in Spain at 12:30 a.m. on June 11. Your first full day in a foreign country is June 11.
Change of Location
You can move about from one place to another in a foreign country or to another foreign country without losing full days; but if any part of your travel is not within a foreign country or countries and takes 24 hours or more, you will lose full days.
You leave London by air at 11:00 p.m. on July 6 and arrive in Stockholm at 5:00 a.m. on July 7. Your trip takes less than 24 hours and you lose no full days.
You leave Norway by ship at 10:00 p.m. on July 6 and arrive in Portugal at 6:00 a.m. on July 8. 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. If you remain in Portugal, your next full day in a foreign country is July 9.
In United States While in Transit
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. You are treated as traveling over areas not within any foreign country.
How to Figure the 12-Month Period
There are four rules you should know when figuring the 12-month period:
- A 12-month period can begin with any day of the month. It ends the day before the same calendar day, 12 months later.
- A 12-month period must be made up of consecutive months. Any 12-month period can be used if the 330 days in a foreign country fall within that period.
- You do not have to begin a 12-month period with your first full day in a foreign country or to end it with the day you leave. You can choose the 12-month period that gives you the greatest exclusion.
- In determining whether the 12-month period falls within a longer stay in the foreign country, 12-month periods can overlap one another.
You live, work, and have a tax home in New Zealand from January 1, 2019, through August 31, 2020, except that you spend 28 days in February 2019 and 28 days in February 2020 on vacation in the United States. You are present in New Zealand for at least 330 full days during each of the following two 12-month periods: January 1, 2019 - December 31, 2019, and September 1, 2019 - August 31, 2020. Your qualifying 12-month period for 2019 is January 1, 2019 – December 31, 2019. For 2020, you may choose September 1, 2019 – August 31, 2020 as your qualifying period. Refer to Chapter 4, Figure 4-B in Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad.