Hi,

Last year my wife (H4) and I (H1B) filed jointly as resident aliens. She was a Bona fide residence - she was in China for the entire year of 2007. So we excluded her foreign income by filling Form 2555.

In 2008, my wife traveled the US twice, 27 days in Jan/Feb and 59 days in Jul/Aug. She was in China for the rest of 2008 (about 280 days).

Our question is: how to pick up the 12-month period so that she can still meet the Physical Presence Test? Can we pick up the 12-month period from 6/1/07-6/1/08 in which she had more than 330 full days?

If so, for the next year, can we pick up 9/1/08-9/1/09 (assuming no additional US travel in 09) so that we can "skip" those 59 days in 2008?

Thanks in advance for you help!

For 2008, she did NOT QUALIFY for the Foreign Income Exclusion, because you cannot spend more than 30days in the U.S. She MAY be able to pro-rate the exclusion until she hit the 31st day, but after that, she lost the exclusion.

She can then pick it up starting on 1 Sep 08.

Suggest you get professional help working this issue, because Foreign Income Exclusions are reviewed carefully by the IRS.

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Originally Posted by AtlantaTaxExpert

For 2008, she did NOT QUALIFY for the Foreign Income Exclusion, because you cannot spend more than 30days in the U.S. She MAY be able to pro-rate the exclusion until she hit the 31st day, but after that, she lost the exclusion.

She can then pick it up starting on 1 Sep 08.

Suggest you get professional help working this issue, because Foreign Income Exclusions are reviewed carefully by the IRS.

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Thanks for the info, but I am still confused...

According to 2008 Form 2555-EZ:

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2. Physical Presence Test

Were you physically present in a foreign country or countries for at least 330 full days during 2008 or any other period of 12 months in a row starting or ending in 2008?

If you answered “Yes,” you meet this test.

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My understanding is that, since my wife was in China for the entire 2007, she would easily meet the test as long as she was in China on 1/1/2008. Because in her case, the 12 months started on 1/1/2007 and ended in 1/1/2008, and she had more than 330 days in a foreign country during that period.

Am I right? :confused: Thanks!

That is what I was talking about when I mentioned that she can pro-rate it until the time she hits the 31st day (though, actually, it's the 35th day).

Again, I recommend you get professional help

Quote:

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Originally Posted by AtlantaTaxExpert

That is what I was talking about when I mentioned that she can pro-rate it until the time she hits the 31st day (though, actually, it's the 35th day).

Again, I recommend you get professional help

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Thanks AtlantaTaxExpert, I appreciated it!

Glad to help!