# One bonafied non resident one not



## boat (May 17, 2014)

Hello all- We have gotten a lot of help from this forum.

Quick question. We have finally gotten our life set up to be working a job outside the USA and not have to file in any country except for the standard USA. We are planning on 2016 filing as bonafied non residents by not being in the country for more than 34 days each and taking the 100k deduction each.

Then my wife's mom is getting sick and she is worried that she will have to return to the USA to deal with her mom and we are wondering how this will effect our bonafied non resident tax status. 

Is there a way I can stay out of the country for the required number of days and my wife goes back into the USA over the 35 days and I still get the 100k deduction and she does not?

Could we still file jointly? 

How would this work?

Help with ideas?

Thanks


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## Bevdeforges (Nov 16, 2007)

It sounds like what you're doing is qualifying under the "physical presence" test, not the "bona fide resident" test. As bona fide residents, what counts is whether you have resident permits (or nationality), have established a home in the country in which you're living and a bunch of other more "intangible" requirements.

It's the physical presence test that involves simply being outside the US for 330 days in a period of 12 consecutive months. (The bona fide resident test requires that you meet the requirements for a complete calendar year - but under the bona fide resident test, if you have to be back in the US for a bit longer than the time allowed under the physical presence test, it's not a big deal.)

Nevertheless, if you are using the physical presence test for both of you, chances are your wife would lose her eligibility for the FEIE if she has to be back in the US for an extended period of time. There is, however, no problem if only one of you takes the FEIE. 
Cheers,
Bev


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## BBCWatcher (Dec 28, 2012)

I'd add that it's also possible to roll off then roll right back onto the FEIE. Let's illustrate how that works with an example. Let's suppose your wife follows this pattern:

until July 2, 2016: works full-time in New Zealand
from July 2, 2016, through October 18, 2016: she takes a leave of absence from her full-time job in New Zealand and visits the United States
from October 18, 2016: she resumes full-time employment in New Zealand

As you can see, she's spending quite a bit of time in the United States -- "over the limit." However, she's also not earning income during her U.S. visit. (Or, if she is, it would be U.S. earned income anyway -- and not a bad thing to do, actually, at least to get some U.S. Social Security credits.) However, she can still take the FEIE for the period until July 2, 2016. She should also be able to take the FEIE again from October 18, 2016. There are a couple ways to do that:

1. The easiest way is to file IRS Form 4868 to get an extension to file your 2016 U.S. tax return until October 15, 2017 (date the return is due at the IRS). By the time it gets to late September, 2017, she will have reached the 330 day milestone outside the United States, and that would qualify her to take the FEIE for that period of time from October 18, 2016, to December 31, 2016 (end of the 2016 tax year) in this example. You would have your tax return ready to file that way in late September or very early October, 2017, and you'd get it into the IRS on time. Note that IRS Form 4868 doesn't grant an extension of time to pay any outstanding tax owed -- you still do your best to try to pay what you think you owe, if anything, before the usual deadlines or at least as soon as you can -- but it does provide a filing extension.

1a. As a variation, you can ask the IRS for an extra extension. The IRS doesn't have to grant one, but you can ask. With good cause (such as this FEIE reason), they'll probably be cooperative.

2. The other way is to file without taking the FEIE for that period from October 18, 2016 through December 31, 2016, but then follow up with an amended tax return (Form 1040X). I don't think this particular approach is recommended, though. There's a very slight bit of danger that if you wait too long to file 1040X that the IRS could limit your ability to take the FEIE. I'd have to look at the exact details since I haven't tried this second approach ("changing my mind" about taking the FEIE), but assuming you understand the rules it's possible.

Not that you can "time" an illness, but this "roll off/roll on" approach works particularly brilliantly if she's going to have seasonal work in 2016 anyway, or could have. Teaching with a long school break would be a classic example. And note carefully that you have to meet the FEIE's physical presence test on both sides of the U.S. visit in order for roll off/roll on to work. You can't pop over to the U.S. _every_ year for a long stay.

That said, she shouldn't worry about the tax issues. If she's got someone to care for, she should do it. Live your lives, please. There are much more important things in life than a bit of income tax, and that includes family.

Does all that make sense?


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## Bevdeforges (Nov 16, 2007)

Just to clarify a bit, assuming that you're taking the FEIE under the physical presence test (i.e. at least 330 days outside the country in any period of 12 consecutive months), if your wife goes back to the States, say for 90 days or so in the middle of the year, you file your taxes jointly (as usual) however your wife has two distinct qualifying periods. The first is for the twelve months ending with the day she leaves for the States, and the second is the 12 months beginning with the day she returns from the States. So she still gets to exclude all her salary earned while she is outside the US. But, you may have to get an extension to wait to file your return until she completes that second 12 month period.

I haven't checked this year's Pub 54, but in the past they sometimes have an example that covers this type of situation.

If, however, you are qualifying under the bona fide resident test and you can show bona fide residence outside the US for the full calendar year, you would just file as normal. (Bona fide residence would involve having a residence permit somewhere outside the US, and probably being covered by and paying into their tax system - though the conditions are a bit vague.)
Cheers,
Bev


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