Dear Sir

Please let me know if I am right in claiming foreign income exclusion for 2006. I am a resident alien and I hold a faculty position in a university in USA. In September 2006, I moved abroad after obtaining leave from my present job.

1) I pass the tax home test because I have taken one year sabbatical leave and one year leave of absence, making my assignment abroad "indefinite" as per IRS publication 54. (indefinite is over 1 year)
2) I intend to pass "physical presence test" as I am filing form 2350 and intend to stay abroad for 330 days out of current 12 month period.

The only problem is that during first year of my leave, my employer in USA is paying me half pay (from Sept'06 to Aug'07). Will the IRS deny exclusion because of this factor? I am not sure and I could not find an answer in IRS publications.

Thanks for any help and advice,

Jun

Jun:

No, the IRS will not deny the exclusion because of U.S.-based income. If they did, most foreign income exclusion request would be denied.

Thanks Tax expert for your advice.

Have a great day

Jun

Glad to help!