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“bona fide residence … determined on a case-by-case basis”. If I

  • have no employer (retired),
  • but have income from legal sources in the places I live
  • have no US home
  • and there are three or more such non-US places each year …

If the time between places exceeds 35 days in a year, e.g., layover plus brief visits to USA relatives, I would fail the physical presence test. Can I be considered instead to have “been a bona fide resident of a foreign country or countries”?

Maybe another way to put it would be, if you are a "bona-fide resident" for N months, can the time before arriving or the time after leaving be also counted?

  • 1
    Do you mean that you have multiple homes outside of the US, in multiple countries? It's not clear to me if you believe there is a country or countries that you are a resident of. And what do these countries believe about your residency, or lack of? – Dan Getz Mar 25 '15 at 3:46
  • you will sleep better if you meet the physical presence test ;) – Anthony Damico Mar 25 '15 at 5:18
  • I cannot meet the physical presence test if I spend 36 days in USA. That's the whole point of the question. My plan is to spend a few months in one place, but it is unlikely that I will be a full eleven months in one of them. costs of traveling could affect choice of travel dates. That along with the need to occasionally return to USA could cause the between-locations time to exceed 35 days. – WGroleau Mar 30 '15 at 18:10
  • Multiple, yes--bullet four. Homes, maybe--that's part of the question. – WGroleau Mar 30 '15 at 18:13
  • When you say whether or not these are your homes is part of the question, do you really mean to say that you don't know if you'll be a resident (whether or not bona fide) in these countries? I suggest finding out, or figuring that out, as that depends more on you and the country in question than on the US. – Dan Getz Mar 31 '15 at 0:27
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Can I be considered ... to have been a bona fide resident ...

Well, are you a resident of a foreign country? That's the first step. If you're not a resident, how could you possibly be a bona fide resident? If you're certain that you are a resident of a foreign country, there's a couple requirements I think you should check if you meet.

1. Length and nature of stay

According to the instructions for Form 2555,

Whether you are a bona fide resident of a foreign country depends on your intention about the length and nature of your stay. Evidence of your intention may be your words and acts. If these conflict, your acts carry more weight than your words. Generally, if you go to a foreign country for a definite, temporary purpose and return to the United States after you accomplish it, you are not a bona fide resident of the foreign country. If accomplishing the purpose requires an extended, indefinite stay, and you make your home in the foreign country, you may be a bona fide resident.

Yes, your intentions matter. It might be easier to analyze the evidence of your intentions if you start by thinking seriously about what your intentions are. From your description, you might meet this requirement if you plan to live your life in this way for an indefinite period of time. However, your situation does not fit any of the examples the IRS gives in Publication 54, so "it may be more difficult [for them] to decide whether you have established a bona fide residence."

2. Subject to foreign countries' income tax laws

The country or countries where you work and reside should consider you to be a resident and subject to their income tax laws. The specific rule, according to Federal Regulations 26 CFR 1.911-2 (c): You are not considered a bona fide resident of a certain country if you "[claim] to be a nonresident of that foreign country in a statement submitted to the authorities of that country" and one of the following is true:

  • Your earned income "is not subject, by reason of nonresidency in the foreign country, to the income tax of that country."
  • "[T]he accuracy of [your submitted claim] has not been resolved as of any date when a determination of [your] bona fide residence is being made"

So if you're trying to avoid income taxes in the foreign countries, you probably won't meet this requirement.


Note on Earned Income Exclusion

You linked to information on the Foreign Earned Income Exclusion, and you say that you "have no employer". There are a few things you should be aware of:

  • The Earned Income Exclusion only applies to what the IRS considers "earned income", which is only some of the types of income that you may have earned. The general idea is that the following don't count:
    • Profits of a corporation
    • Income produced by capital, such as interest, capital gains, retail profits, etc.
    • Pensions and similar fixed incomes
  • If you are a self-employed US citizen, you owe self-employment tax wherever in the world you live or work. The Foreign Earned Income Exclusion doesn't reduce that.
  • I guess I need to study pub 54 thoroughly. The quote says "A foreign country" and "return to the US after you accomplish." But my purpose will never be fully accomplished and it requires more than one country. On the other hand, it is not likely that I will have foreign earned income--but it is possible. – WGroleau Mar 30 '15 at 18:36
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From the same source:

The bona fide residence test applies to U.S. citizens and to any U.S. resident alien who is a citizen or national of a country with which the United States has an income tax treaty in effect.

So for starters - you must be a citizen of a country which has a tax treaty with the US. Being covered by the tax treaty also requires you being a tax resident in that country (tax treaties only apply for tax residents in either or both parties to the treaty). So if you're "nomadic" - you may have a problem with the residency requirement of the other country.

If that condition is met, and you are otherwise indeed a resident in that other country, then yes - you'll probably meet the bona-fide residency test despite failing the physical presence test. However continuously failing the physical presence test may lead to some attention from the IRS as to whether you're indeed a resident in the other country and not just using your foreign citizenship to avoid taxes. If you're genuinely living elsewhere but travel a lot to the US for business/personal reasons, you'll probably be able to defend your position in an audit.

Do talk to a US-licensed tax adviser (CPA/EA/Attorney) who provides tax services in your home country.

  • 1
    That's an "or": if you're a US citizen, as the OP mentioned in his title, you don't need to also be a citizen of another country. And those statements don't say that the country a US citizen resides in must have a tax treaty. – Dan Getz Mar 25 '15 at 9:57
  • @DanGetz no, actually. If you read the quote - it says exactly that. A US citizen who is a citizen or a national of a country.... Tax treaties only apply to residents (check the treaty in question of course, but that's the general rule), and US is the only country in the world to consider all of its citizens automatically residents. – littleadv Mar 25 '15 at 16:08
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    OK, I see now how this sentence could be misread. However, in the first paragraph of that page, you can see that they did not intend for it to mean what you think it means. – Dan Getz Mar 25 '15 at 19:14
  • And if you look around on other information from the IRS, this same information is repeated over and over. – Dan Getz Mar 26 '15 at 11:09
  • Correction: it applies to those people AND it applies to a US citizen. As for "attention from the IRS," the cited page implies that the IRS has to determine in every case individually whether you are a "bona-fide resident." If it is impossible to even make a guess in advance, US courts would probably label it "unconstituionally vague." (And the process of going to court would undoubtedly take longer than 35 days!) – WGroleau Mar 30 '15 at 18:22

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