# Tax home



## brown55 (Mar 25, 2016)

I am a US citizen looking into retirement options. I would like to spend about 7 or 8 months in my wife's house (currently owned by her father) in South East Asia, where I will be considered a "resident" for tax purposes as I will spend more than 6 months there. The rest of the time, I will plan to live in our California house with our kids. Am I also considered a "resident" for tax purposes in the US? I found the publications very vague on this issue. Where is my tax home?


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## BBCWatcher (Dec 28, 2012)

You are always a tax resident of the United States if you are a U.S. person (U.S. citizen or U.S. permanent resident), no matter where you physically are. However, you would be eligible to take a Foreign Tax Credit to account for foreign income tax paid on any non-U.S. source income. Likewise, presumably Cambodia has a foreign tax credit available to account for the income tax you pay on your U.S. source income.

I think you're asking whether you would be, in this scenario, a _California_ tax resident. The State of California's Franchise Tax Board has an entire publication devoted to that question: Publication 1031. The 2015 edition is available here. In my view you would be a full-time tax resident of California in the scenario you describe, but please refer to the publication.


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## Bevdeforges (Nov 16, 2007)

You should probably check into the tax laws in the country where that house is located. Being there more than 6 months (or 183 days) isn't always the rule of law in all countries. Other factors include where your family is located and where your main financial resources come from. The type of visa you're on may also influence the final call.

It's also not the case in all places that you get direct tax credits for taxes paid to other venues. There are a variety of ways to avoid double taxation - some exempt certain forms of foreign source income, while others grant credits at fixed and agreed upon rates. Probably best to check with the local tax authorities before assuming anything.
Cheers,
Bev


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## brown55 (Mar 25, 2016)

Thank you both for the replies.

My question was partly (perhaps largely) about the Foreign Earned Income Exclusion, since most of my income in retirement would be non-US with no US source (e.g., inherited property developed with zero value added from the US).

The website says something like "If you meet certain requirements, you may qualify for the foreign earned income and foreign housing exclusions and the foreign housing deduction. If you are a U.S. citizen or a resident alien of the United States and you live abroad, you are taxed on your worldwide income. However, you may qualify to exclude from income up to an amount of your foreign earnings that is adjusted annually for inflation. To qualify for the foreign earned income exclusion, your tax home must be in a foreign country throughout your period of bona fide residence or physical presence abroad."

The requirements seem to involve defining a "tax home" and a "period", but how these are defined I find very vague (or maybe it's that I am just not an accounts person at all). 

Is there a clear definition of these terms that you could point me to? Thank you.


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## Bevdeforges (Nov 16, 2007)

It doesn't sound as though your "foreign income" is eligible for the FEIE. The FEIE applies only to "earned" income - i.e. salary and salary-like earnings (say from a business or sole proprietorship). Check IRS pub 54 for the details, including a discussion of how the IRS determines/defines your "tax home."

Generally speaking, you have to be outside the US for a total of 330 days during a period of 12 consecutive months - or a "bona fide resident" of another country for an entire calendar year. The bona fide resident criteria get into such things as "intent to return" to the US, your immigration status in the foreign country and lots of other kind of "fluid" sorts of things. In Pub 54, start here: https://www.irs.gov/publications/p54/ch04.html#en_US_2015_publink100047401

but there is information of interest to you throughout the publication.
Cheers,
Bev


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## brown55 (Mar 25, 2016)

Thank you, Bev.


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