J.K. Lasser's Your Income Tax 2013: For Preparing Your 2012 Tax Return

36.3 Qualifying for the Foreign Earned Income Exclusion

You may elect the exclusion for foreign earned income only if your tax home is in a foreign country and you meet either the foreign residence test or the foreign physical presence test of 330 days. The foreign residence and physical presence tests are discussed in 36.5. Tax home is discussed at 20.6–20.8. If your tax home is in the U.S., you may not claim the exclusion but may claim the foreign tax credit and your living expenses while away from home if you meet the rules in 20.9 for temporary assignments that are expected to last, and actually do last, for one year or less. U.S. government employees may not claim either the earned income exclusion or housing exclusion based on government pay.

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Caution

Countries Subject to Travel Restrictions

You may not claim the foreign earned income exclusion, or the housing exclusion or deduction, if you work in a country subject to U.S. government travel restrictions. You are not treated as a bona fide resident of, or as present in, a country subject to the travel ban. See Form 2555 for countries on the restricted list.

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Exclusion prorated on a daily basis.

If you qualify under the foreign residence or physical presence test for only part of 2012, the $95,100 exclusion limit is reduced on a daily basis.

EXAMPLES

1. You were a resident of ...