Physical-Presence Test

AAA

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 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.

RELATED TERMS
  1. IRS Publication 597

    A document published by the Internal Revenue Service (IRS) that ...
  2. 183-Day Rule

    The 183-day rule is part of the "substantial presence test" used ...
  3. Foreign Housing Exclusion And Deduction

    An allowance for taxpayers who live and work in a foreign country ...
  4. Home Office

    An office located inside the taxpayer's home that serves as the ...
  5. Bona Fide Foreign Resident

    Any resident of a foreign country that meets the IRS criteria ...
  6. Deduction

    Any item or expenditure subtracted from gross income to reduce ...
Related Articles
  1. Get A Tax Credit For Your Foreign Investments
    Taxes

    Get A Tax Credit For Your Foreign Investments

  2. 5 Tax Credits You Shouldn't Miss
    Taxes

    5 Tax Credits You Shouldn't Miss

  3. Give Your Taxes Some Credit
    Taxes

    Give Your Taxes Some Credit

  4. Federal Tax Brackets
    Taxes

    Federal Tax Brackets

comments powered by Disqus
Hot Definitions
  1. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
  2. Ratio Analysis

    Quantitative analysis of information contained in a company’s financial statements. Ratio analysis is based on line items ...
  3. Days Payable Outstanding - DPO

    A company's average payable period. Calculated as: ending accounts payable / (cost of sales/number of days).
  4. Net Sales

    The amount of sales generated by a company after the deduction of returns, allowances for damaged or missing goods and any ...
  5. Over The Counter

    A security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, etc. The phrase "over-the-counter" ...
  6. Earnings Before Interest After Taxes - EBIAT

    A financial measure that is an indicator of a company's operating performance. EBIAT, which is equivalent to after-tax EBIT ...
Trading Center