The tax deadline is approaching, you’ve meticulously tracked your travel, and the cold reality sets in: you only managed 328 full days abroad. You missed the Physical Presence Test (PPT) requirement by two days. Your eligibility for the Foreign Earned Income Exclusion (FEIE)—and the massive tax savings that come with it—is gone.
This scenario is common, especially for digital nomads and expats who had unexpected trips back home or prolonged US stays. But failing the PPT doesn’t automatically mean you owe a huge, unavoidable tax bill. You still have options.
Option 1: The Bona Fide Residence Test (BFR)
If you fail the PPT, your next—and often superior—option is to try to qualify under the Bona Fide Residence Test (BFR).
The BFR requires you to be a bona fide resident of a foreign country for an uninterrupted period that includes one entire tax year. This is a qualitative test based on your intent and your ties to the foreign country, rather than just day counting.
Evidence of BFR includes:
- Foreign residency permits or visas.
- Establishing a permanent home (renting or owning a property).
- Joining local organizations, opening bank accounts, and paying local taxes.
- The nature and purpose of your absence from the US.
The BFR can be a lifeline for those who missed the PPT but have deep, long-term roots established abroad.
Option 2: The Foreign Tax Credit (FTC)
If you fail the PPT and don’t qualify for the BFR, your last line of defense against double taxation is the Foreign Tax Credit (FTC).
- If you paid income tax to a foreign government, you can use the FTC (Form 1116) to claim a credit against your US tax liability.
- In high-tax countries (like Canada or the UK), this credit will often eliminate your US federal tax liability completely, because you paid more tax abroad than you would owe the US.
- Even in medium-tax countries, the FTC can significantly reduce your bill, saving you from the full shock of losing the FEIE.
The Critical Need for Precise Documentation
All three of these strategies—PPT, BFR, and FTC—hinge on having verifiable, auditable records of your income sourcing, tax payments, and, most importantly, your physical location.
The single biggest mistake is assuming your travel is compliant. If you realize you’ve failed the PPT, you need to quickly and confidently analyze your situation to see if the BFR or FTC provides a better, compliant solution. This requires a tool that can analyze your physical presence with IRS-level precision to either confirm your PPT failure or, conversely, find a rolling 12-month period you missed that does qualify you.
Don’t panic about missing the 330-day mark. Get a definitive status check first.
Before you file an amended return or spend weeks manually sifting through foreign tax documents, you need to be 100% sure of your Physical Presence Test status. Our ResidencyCheck Validation Test performs the complex rolling 12-month calculation instantly. We tell you, with certainty, if you qualified or where you fell short, providing the foundation for your BFR or FTC strategy.
Your Action Plan starts with certainty. Get the ResidencyCheck Compliance Agent today.