BONA FIDE RESIDENT TEST
The Bona Fide Resident Test is one of the two tests US Americans and green card holders living abroad can use to qualify to claim the Foreign Earned Income Exclusion, the Foreign Housing Exclusion, or the Foreign Housing Deduction. If your tax home is in a foreign country, the Physical Presence Test or the Bona Fide Resident Test can be used by an expat living overseas to maximize the exclusion of their foreign earned income and avoid double taxation.
What are the requirements to meet the bona fide residence test?
To meet the bona fide resident test
What is a bona fide resident?
You are not automatically a bona fide resident by simply living in a foreign country or countries for a full tax year. To be a bona fide resident you must:
Important!! The bona fide resident test is determined on a case by case basis based on questions you answer on the IRS Form 2555 or 2555-EZ. Factors taken into account as to whether you qualify as a bona fide resident are the nature and length and also your intention or purpose of your stay abroad. If you are overseas and work for an indefinite or long period of time and set up a permanent residence for you and your family you will likely qualify. However, if you go overseas for a defined period of time to work on a project, you will likely not qualify.
If you leave the country for short periods of time for business or pleasure, as long as you intend to return, you can still be considered a bona fide resident if you meet the test above.