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FORM 2555 CLIENT PREVENTED RETURN TO HOME IN FOREIGN COUNTRY

Drphibes
Level 5

US citizen Client lives and works in Singapore but returned to the US in 2021 for the 1st time in 3 years to take care of some rental property he owns.  His stay in the US was scheduled for 21 days but while he was in the US, Singapore closed it's doors from anyone returning for months due to COVID-19.  I know there is a provision for having to leave a country due to COVID-19, but what about not being able to get back home/work?  He has been able to work remotely from the US.

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4 Replies 4

One qualifies for Foreign Income Exclusion (Form 2555) by either

Physical Presence Test; OR

Bona Fide Residence Test.

 

BFR is based on facts and circumstances.  

 

California, being so tenderly loving and all, declared that the state would NOT treat folks hunkering down in the Golden State during COIVD as CA residents.  I do NOT know if IRS has a similar stance.  (If you find something along this line for the feds, please update me for general knowledge.  I don't have client in your client's situation.)

 

That said, check whether your client(s) can claim Bona Fide Residences in Singapore.  Facts and Circumstances.  I'm NOT saying he/she/they can.  That would be an angle for the exclusion and for you to advise.   Three years eating Singapore rice noodle (my favorite occasional dish that somewhat goes well with Bourbon) may be a good point for Facts and Circumstances, but don't quote me on this.   Joking aside, I do believe circumstances under COVID should be considered and accepted.

 

When in doubt (if the position is taken), consider filing Form 8275.    

 

Hope this helps. 

Terry53029
Level 12
Level 12

Maybe @itonewbie will jump in, as he is very knowledgeable on things of this nature.

You might want to visit:  https://www.irs.gov/forms-pubs/covid-19-relief-for-form-2555-filers

3rd para: You may still be able to meet requirements of the bona fide residence or physical presence test for 2019 or 2020 for purposes of determining the foreign earned income exclusion and housing cost exclusion or deduction. For more information and examples see Revenue Procedure 2020-27.

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Drphibes
Level 5

Ya, already saw that procedure but it only addresses leaving a country early due to a COVID emergency, not being locked out from returning after leaving voluntarily and the procedure ended on July 15th 2020.  This lockout is in 2021.

I think I can make a good case using facts and circumstances based on intent.  We have their original flight tickets back to Singapore which would have met the less than 35 days back in the US , the date Singapore closed their doors while they were in the US, the fact that the taxpayers got on the 1st plane back as soon as Singapore conditionally opened, and the fact that they will not be leaving through the end of 2021 and through 2022 that covers the 12 month period.

Thanks for your response, keep contributing!

Dr. Phibes

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