Form 2555 Foreign Income Exclusion

[Randall]

Anyone done these?  Client's son moved to Japan to work there.  Began Oct 1, 2016.  If I'm reading the instructions correctly, I can't file Form 2555 and take the exclusion until he has met the bona fide resident or physical presence test which won't be until 9/30/17.  I can file return and pay tax and amend return later or file an extension.  The extension will give us until Oct 15 when he will have been there for a full year.  Is this correct, no way to file return now and project his time there out to Sept 30?

 

[Margaret CPA in OH]

I have clients in Australia so do this every year.  The first year I did extend with their agreement but I believe you can also put in the anticipated date to meet the physical presence and file.  If it doesn't happen, amend then.  Input the dates and see if it flies.

[Randall]

Thanks Margaret.  Yes, I did that and the efile was created with no problems.  The instructions do say you can enter an end date after 2016.  But the first part of the instructions seem to indicate you need to have already passed the test (that is, as of 3/15/17 today been there a year).  I too was wondering about just filing it and if accepted, ok.  If he returns early, then amend the return.

 

[Abby Normal]

I did two of these for 2015 and had to file special extension form 2350 because to use bona fide resident test, it has to be one full calendar year (not just 12 consecutive months). So the test period for you is 1/1/17-12/31/17, and you extend it until 1/31/18.

With efile starting 1/20/16, it only gave me an 11 day window to efile the 2015 return.

Now, if you can use the physical presence test, you can meet that at an earlier date.

[Margaret CPA in OH]

I used the physical presence test the first year but bona fide resident the following 4 years.  They are actually becoming citizens in 2017.

[Randall]

I was going to use the physical presence test so the 12 months would end 9/30/17.  Then with a regular extension, I could get it in by 10/15/17.  I was hoping to avoid the 2350.  So, Margaret (or Abby), can you still use the anticipated date for the physical presence test and file now or would I have to wait until 10/1?

 

[Margaret CPA in OH]

I thought you just said above that you created the efile with the anticipated date.  If it isn't an issue to postpone, do so.  If it is, file now.  I would file now myself.  With my AU clients, it wasn't an issue to postpone so I did.  YMMV

[Abby Normal]

1 hour ago, Randall said:

I was going to use the physical presence test so the 12 months would end 9/30/17.  Then with a regular extension, I could get it in by 10/15/17.  I was hoping to avoid the 2350.  So, Margaret (or Abby), can you still use the anticipated date for the physical presence test and file now or would I have to wait until 10/1?

 

You have to wait until the test is met, so file in October.

[Randall]

15 hours ago, Abby Normal said:

You have to wait until the test is met, so file in October.

I agree.  I'll file the extension, and he'll meet the test 9/30.  A follow up question:  Instructions of 2555 say to mail the return.  ATX is allowing an efile to be created.  I assume we can still efile a return with Form 2555.  Or do these have to be paper filed?  That wouldn't seem right.  Maybe the instructions are just not up to date.  Have you been efiling your returns with 2555?

 

 

[Margaret CPA in OH]

All of mine were efiled, every year.

[Randall]

2 hours ago, Margaret CPA in OH said:

All of mine were efiled, every year.

Ok, thanks.