Physical Presence Test for Foreign Income Exclusion: IRC Section 911

Determining Eligible Days Outside the U.S., Allocating Excludible Income Earned Across Tax Years

A live 110-minute CPE webinar with interactive Q&A


Tuesday, June 5, 2018 (in 13 days)

1:00pm-2:50pm EDT, 10:00am-11:50am PDT

or call 1-800-926-7926

This webinar will provide tax advisers and compliance professionals with a thorough and practical guide to the complex tax rules in determining whether a taxpayer working outside the U.S. meets the “physical presence test” for excluding foreign earned income. The panel will define presence in the context of earning income, detail travel and other considerations as they apply to calculating days spent outside the United States, and provide illustrations on calculating and allocating foreign-earned income.

Description

U.S. taxpayers earning compensation outside the United States may exclude certain foreign earned income from their U.S. taxable income if the taxpayer meets one of two tests, either the “tax home” or the “physical presence” test. While each of these standards presents challenges for tax advisers, the “physical presence” test can trip even experienced tax professionals.

Section 911 allows a U.S. taxpayer to exclude up to a statutory limit ($104,100 in 2018) if the taxpayer spends at least 330 days outside the U.S. in a 12-month period. The days do not have to be consecutive, and they don’t have to fall within a single calendar year. The 330-day calculation may include travel and non-work hours under the circumstances outlined in the regulations to IRC 911.

While the regulations provide details on what constitutes all or a portion of a day spent outside the U.S., tax advisers still face challenges in determining total eligible days to substantiate a taxpayer meets the physical presence test and in allocating excludable foreign earned income between tax years.

The changes to the foreign tax credit regime found in tax reform make it more critical than ever for tax advisers to understand the income-exclusion rule to avoid unnecessary tax consequences for their clients.

Listen as our experienced panel provides a thorough and practical guide to the physical presence test for excluding foreign earned income under IRC Section 911.

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Outline

  1. Section 911 excludible foreign income
  2. 330 day outside the U.S. rules
  3. Allocating income between two different tax years
  4. Choosing between foreign tax credit and foreign earned income exclusion after the tax reform law

Benefits

The panel will discuss these and other critical topics:

  • What constitutes a “day outside the United States” for purposes of counting toward foreign earned income exclusion
  • What type of income is eligible for exclusion
  • How do the changes to the foreign tax credit regime found in the new tax reform bill impact the decision to choose to exclude foreign earned income rather than claim a foreign tax credit under Section 901
  • How to allocate earned income when the total number of days outside the United States meets the 330-day test spread over two tax years

Faculty

Kovan, Jason
Jason Kovan, JD, CPA, MBA, MST, PI

Partner
Expat Tax Partners

Mr. Kovan has over 20 years of tax experience. Prior to founding his firm, he was an Executive Tax Director with KPMG...  |  Read More

Strohl, Marc (new)
Marc J. Strohl, CPA

Principal
Protax Consulting Services

Mr. Strohl specializes in international U.S. individual income taxation issues as related to individual U.S....  |  Read More

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