Physical-Presence Test

Filed Under: ,
Dictionary Says

Definition of 'Physical-Presence Test'


Similar to the bona fide foreign residence test, the physical-presence test allows taxpayers to claim the foreign earned income exclusion. The test mandates that a taxpayer must be physically present in a foreign country for at least 330 full days out of the year in order to claim the exclusion. The days do not have to be consecutive and the test applies both to U.S. citizens and resident aliens.


Investopedia Says

Investopedia explains 'Physical-Presence Test'


The reason for being abroad is irrelevant to this test. However, a family emergency, illness or employer directive is not a sufficient reason to allow for the exclusion if it causes the taxpayer to be present in a foreign country for less than the required 330 days. Furthermore, a "day" is considered a full 24-hour period, so days of arrival and departure in a foreign country do not count toward the required time.

comments powered by Disqus
Hot Definitions
  1. Legal Monopoly

    A company that is operating as a monopoly under a government mandate. A legal monopoly offers a specific product or service at a regulated price and can either be independently run and government regulated, or government run and regulated.
  2. Closed-End Fund

    A closed-end fund is a publicly traded investment company that raises a fixed amount of capital through an initial public offering (IPO). The fund is then structured, listed and traded like a stock on a stock exchange.
  3. Payday Loan

    A type of short-term borrowing where an individual borrows a small amount at a very high rate of interest. The borrower typically writes a post-dated personal check in the amount they wish to borrow plus a fee in exchange for cash.
  4. Securitization

    The process through which an issuer creates a financial instrument by combining other financial assets and then marketing different tiers of the repackaged instruments to investors.
  5. Economic Forecasting

    The process of attempting to predict the future condition of the economy. This involves the use of statistical models utilizing variables sometimes called indicators.
  6. Chicago Mercantile Exchange - CME

    The world's second-largest exchange for futures and options on futures and the largest in the U.S. Trading involves mostly futures on interest rates, currency, equities, stock indices and agricultural products.
Trading Center