For US citizens living and working abroad, the Foreign Earned Income Exclusion (FEIE) is the holy grail of tax breaks. It allows you to exclude a significant portion of your income from federal taxes—but only if you qualify. The most common path to qualification is the Physical Presence Test (PPT).
It sounds simple: you must be physically present in a foreign country (or countries) for 330 full days during any period of 12 consecutive months. But for the constantly moving digital nomad, this is a dangerous tightrope walk.
The Hidden Pitfalls of the 330-Day Rule
A “full day” is defined as 24 consecutive hours beginning at midnight. Missing the 330-day mark by even one hour on one day can disqualify you for the entire tax year, resulting in hundreds of thousands of dollars in unexpected tax liability and penalties.
The most common mistakes include:
- Partial Day Confusion: Travelers often forget that a day of arrival or departure (where they spend part of the day in the US) does not count as a full day abroad.
- Airport Layovers: Layovers on US soil, even if you never leave the airport, count as US presence.
- The Rolling 12-Month Period: The 12-month period doesn’t have to align with the calendar year. You have to prove eligibility for the entire tax year based on the most favorable 12-month period you can establish. Tracking this manually across multiple years is mathematically complex and error-prone.
A simple spreadsheet or travel app is not enough to withstand an IRS audit. The key to successful PPT qualification is not just counting, but proving that your counting method is rigorous, documented, and mathematically sound according to IRS Publication 54 rules.
The Path to Certainty
The PPT is crucial for maximizing your FEIE benefit, but its complexity turns it into a high-stakes calculation. Getting this wrong is not just an accounting error; it’s a residency mistake that can cost you dearly.
Before you file, you need absolute certainty that you meet the complex residency and day-counting requirements for the FEIE.
Ready to turn your travel records into legally defensible tax status?
Manual day-counting is too risky when the FEIE is on the line. Our ResidencyCheck Validation Test runs your full travel history against the IRS’s Physical Presence Test and Substantial Presence Test rules, providing a comprehensive, audit-proof report on your exact tax residency status.
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