Part year foreign income

[Possi]

I have a new client, a Priest who has been working abroad for many years. Now he is back in the US, beginning July 1, 2016. He is a contract Priest for the military, and is being paid as a sole proprietor on a 1099Misc.

I am looking forward to doing this tax return, and trying to study up before I'm knee deep in the hoopla. I read from the IRS site, but I still am unclear on how much and how to exclude his foreign income. He won't have 330 consecutive days in the foreign country for 2016. Am I understanding that I will prorate his income? Or, is there another way to include that income and take a credit for foreign taxes paid (since he did pay tax on that income)?

This is from the IRS website, in part:

Part Year Exclusion

If you qualify under either the bona fide residence test or the physical presence test for only part of the year, you must adjust the maximum limit based on the number of qualifying days in the year. The number of qualifying days is the number of days in the year within the period on which you both:

1. Have your tax home in a foreign country, and
2. Meet either the bona fide residence test or the physical presence test.

For this purpose, you can count as qualifying days all days within a period of 12 consecutive months once you are physically present and have your tax home in a foreign country for 330 full days. To figure your maximum exclusion, multiply the maximum excludable amount for the year by the number of your qualifying days in the year, and then divide the result by the number of days in the year.

Physical Presence Test

Under the physical presence test, a 12-month period can be any period of 12 consecutive months that includes 330 full days. If you qualify under the physical presence test for part of a year, it is important to carefully choose the 12-month period that will allow the maximum exclusion for that year.

My edit; Here is the complete link: https://www.irs.gov/individuals/international-taxpayers/figuring-the-foreign-earned-income-exclusion

Edited November 26, 2016 by Possi
added the link

[SaraEA]

You answered your own question.  He must have 330 full days in 12 consecutive months.  July 1 2015 to June 30 2016 is 12 consecutive months.

[Possi]

On 11/27/2016 at 8:55 PM, SaraEA said:

You answered your own question.  He must have 330 full days in 12 consecutive months.  July 1 2015 to June 30 2016 is 12 consecutive months.

Oh, so I can go back from June 30 for my count and it can all be excluded. Sorry, I just saw this. 

[Lion EA]

It's two part, right?  330 days in a rolling 12 months qualifies you for the exclusion.  But in the quote above, only 6 months were in 2015, so the exclusion for 2015 is HALF the annual exclusion, more or less.  Right?

[SaraEA]

Exactly right Lion.