Level 2

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My client does not qualify for the physical presence test for the foreign income exclusion. Lacerte is calculating the exclusion. Why?

Forum|Forum|6 years ago
December 7, 2019
8 replies
42 views

My client clearly doesn't qualify for the foreign income exclusion but I want to show that on the form. The form is calculating that she does, even though she was only in Afghanistan for 197 days. What am I doing wrong?

Lacerte Tax

This topic has been closed for replies.

Best answer by itonewbie

Why would you show that on the form? If she doesn't qualify, F.2555 would not even be filed.

Lacerte doesn't calculate FEIE in the event the taxpayer fails PPT unless you have made entries to indicate that the taxpayer qualifies for BFR. Note, however, PPT does not only count current year days but days in any consecutive 12-month period. So, not having enough days in the current year doesn't mean that the individual is not eligible.

sjrcpa

Level 15

Sounds like you don't have the dates enetered correctly and/or completely. Lool at the form and see what period it is using.

The more I know the more I don’t know.

S

sharon11Author

Level 2

The dates entered are 1/1/18-12/31/18 Within that period she was only in Afghanistan for 197 days.

S

sharon11Author

Level 2

Her prior accountants calculated 2016 and 2017 on a prorated basis but used calendar year for the reporting period. She is used to receiving the exclusion, though in 2016 and 2017 she wasn't eligible either because she didn't meet the 330 day rule. I want to produce the form showing she's not eligible.

T

TaxGuyBill

Level 15

First, you want to determine if she IS eligible. When using ANY 12 month period (such as July 2017 through June 2018), does she meet the 330 day test? Don't only use calendar years.

itonewbie

Level 15

The law simply does not permit the exclusion to be prorated unless PPT or BFR is met. Either way, it seems to me your client may not even have a tax home in Afghanistan to start with. What type of visa was she on? Was she on rotational duties? How long is her assignment there supposed to last? Etc., etc., etc.

---------------------------------------------------------------------------------Still an AllStar

I

Illni

Level 4

Can I call you? I have a client on rotational basis in and out of Iraq -- clearly does not meet 330 day presence for 2019 calendar year. I'm trying to get dates for 2018 presence in Iraq as well. If we can get a 330 day period that overlaps 2018 and 2019, does that give them the full exclusion on their 2019 wages or only the months included in the 12 month period that meets the 330 day test?

sjrcpa

Level 15

If they qualify, the exclusion for 2019 will be prorated by number of days in 2019 they qualified divided by 365.

Where are they staying while in Iraq? I'm guessing no tax home in Iraq.

The more I know the more I don’t know.

T

TaxGuyBill

Level 15

Good point about it being unlikely to be a Tax Home.

itonewbie

Level 15

And with the no vote, I can take an early day off on Friday

---------------------------------------------------------------------------------Still an AllStar

itonewbieAnswer

Level 15

Why would you show that on the form? If she doesn't qualify, F.2555 would not even be filed.

Lacerte doesn't calculate FEIE in the event the taxpayer fails PPT unless you have made entries to indicate that the taxpayer qualifies for BFR. Note, however, PPT does not only count current year days but days in any consecutive 12-month period. So, not having enough days in the current year doesn't mean that the individual is not eligible.

---------------------------------------------------------------------------------Still an AllStar

itonewbie

Level 15

Thanks for the no vote.

---------------------------------------------------------------------------------Still an AllStar

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