A great number of world travelers utilize the Foreign Earned Income Exclusion to keep up to $102,100 in income out of the paws of the IRS (2017 tax year.)
For those who aren’t bonafide residents of another (non-US) country, this requires passing the Physical Presence Test (PPT) by being in a foreign country or countries for at least 330 days.
2017 is the first year we tried to pass the PPT, and getting it wrong by even one day could cost $20k or more in tax. Needless to say I wanted to get it right.
Physical Presence Test
As with most things in the Internal Revenue Code, what could be simple and elegant is… not. The IRS even uses the phrase “physical presence test” in the definition of the Physical Presence Test. Nice!
Here is the definition and nuances from Publication 54: (emphasis throughout is mine)
To pass the physical presence test requires being physically present in a foreign country or countries 330 full days during a period of 12 consecutive months. The 330 qualifying days do not have to be consecutive.
Full day. A full day is a period of 24 consecutive hours, beginning at midnight.
Travel. 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 doesn’t count toward the 330-day total.
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.
Change of location. You can move about from one place