In a Revenue Procedure, Internal Revenue Services (IRS) has waived the residency and presence tests that apply for purposes of the IRS Tax Code governing the foreign earned income and foreign housing cost exclusions with respect to certain U.S. individuals in Burundi due to adverse conditions in that country beginning on May 14, 2015.
The US State Department issued travel warnings to it citizen and urged immediate evacuation of U.S. citizen from the country leading to the waiver in the residency and presence test waiver.
Background. The US Tax Code governing foreign earned income allows a “qualified individual,” as defined in the tax code to be exempt from taxation on their individual's foreign earned income and the housing cost amount.
A qualified individual is an individual whose tax home is in a foreign country and who is either:
Under certain circumstances, the time requirements of the foreign residence test and the foreign presence test may be waived. If these requirements are waived, the taxpayer is treated as having met the foreign residence requirement for the period during which he was a bona fide resident of the foreign country, or he will be treated as having met the foreign presence requirement for the period during which he was present in the foreign country. He will be so treated even though the relevant time requirement has not been met.
Three conditions must be met for the waiver to apply:
Waiver of requirements for 2015.
Since war, civil unrest, or similar adverse conditions precluded the normal conduct of business in Burundi beginning on May 14, 2015. An individual who left Burundi on or after May 14, 2015 will be treated as a qualified individual with respect to the period during which that individual was present in, or was a bona fide resident of, Burundi, if the individual establishes a reasonable expectation of meeting the requirements of but for those conditions.
To qualify for the tax relief an individual must have established residency, or have been physically present, in Burundi on or before May 14, 2015 (i.e., the date that IRS determined that individuals were required to leave the country). Individuals who establish residency or the first physically present, in Burundi on or after May 14, 2015 will not be treated as qualified individuals.
Having foreign earn income can be a little tricky when filing your taxes, Kolen Services is available to assist and can be reached at 540-693-5881.
Rev. Proc. 2016-21, 2016FED ¶46,288
Code Sec. 911
CCH Reference – 2016FED ¶28,049.5775
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CCH Reference – TRC EXPAT: 12,108
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