What is the Physical Presence Test—and Why Does It Matter for U.S. Expats?

It’s not a fitness challenge. You won’t need a stopwatch, a yoga mat, or to prove how many push-ups you can do in a minute. But the physical presence test is a test—one that can save you thousands in U.S. taxes if you pass.

Think of it as the IRS’s version of “Are you really living abroad, or just on an extended vacation?” They’re not judging your lifestyle choices (promise), but they are counting your days—literally. Spend enough of them outside the U.S., and you may qualify to exclude a big chunk of your foreign income from your American tax bill.

For expats, remote workers, and location-hoppers, it’s a surprisingly simple rule with surprisingly big consequences. And unlike most things in the U.S. tax code, it’s one you can explain without breaking into a cold sweat.

What is the Physical Presence Test?

Spending most of your year outside the U.S.? The IRS might reward you for it — in the form of lower taxes. The physical presence test is one of two ways U.S. expats can qualify for the Foreign Earned Income Exclusion (FEIE), which allows you to leave a portion of your foreign income off your U.S. tax return.

It’s not automatic, though. To claim the FEIE, you have to meet the requirements of one of these two tests:

• Physical Presence Test: A day-counting rule. You must be physically present in a foreign country (or countries) for at least 330 full days in any 12-month period.
• Bona Fide Residence Test: A “life abroad” rule. You need to show that you’ve genuinely made a foreign country your home for a full tax year, with strong ties and the intention to stay.

The physical presence test works best for people who travel frequently or live abroad without necessarily settling in one place long-term. As long as you hit that 330-day threshold — and those days are outside U.S. airspace and international waters — you’re in the clear.

Requirements and eligibility: Meeting the Physical Presence Test

The physical presence test isn’t about where you pay rent or where your stuff is — it’s purely about the time you’ve spent outside the U.S. Here’s what you need to know to qualify.

The 330-day rule

• You must spend at least 330 full days in a foreign country (or countries) during any consecutive 12-month period.
• That 12-month window doesn’t have to match the calendar year or the tax year — you can start it on any date.

How the IRS counts a “full day”

• A full day means a 24-hour period, starting at midnight and ending the following midnight.
• Your first full day is the first day you are present in a foreign country for the entire day.
• Partial days — including the days you travel to or from the U.S. — don’t count.

Which days qualify

• Regular workdays abroad.
• Business trips in a foreign country.
• Temporary absences from your foreign home (as long as you remain outside the U.S.).
• Days you couldn’t travel due to civil unrest or adverse conditions, if the IRS issues a waiver for your location.

Proving it to the IRS: How to document your days abroad

Qualifying for the physical presence test is one thing. Proving it to the IRS is another. You’ll need a paper trail that clearly shows where you were — and when — to back up your claim on Form 2555.

Essential documents

Keep records that show both your location and your foreign tax home, such as:

• Passport stamps and travel itineraries
• Airline tickets or boarding passes
• Foreign visas or residency permits
• Employment contracts or client agreements
• Foreign bank statements and utility bills

Why detailed records matter

The IRS isn’t guessing — they’ll check the number of days you claim against the evidence you provide. If your documentation is vague or incomplete, you could lose the Foreign Earned Income Exclusion and face a higher tax bill.

What the IRS looks for

On your tax return (and in any follow-up questions), the IRS may review:

• The exact dates you entered and left each country
• Proof you maintained a foreign tax home during the 12-month period
• Whether your claimed days meet the 330-day requirement under U.S. law

Physical Presence Test vs. Bona Fide Residence and other tests

The physical presence test is just one of several ways the IRS figures out your tax situation when you live or work abroad. Each test has its own rules, quirks, and ideal candidates. Knowing the differences can help you choose the one that saves you the most.

Physical Presence Test

This is the day-counter’s dream — no lifestyle questions, no “intent” debates, just numbers.

• What it measures: Time spent abroad — at least 330 full days in any 12-month period.
• Best for: Digital nomads, frequent travelers, and expats without a fixed home overseas.
• Key benefit: Straightforward rule that can qualify you for the Foreign Earned Income Exclusion.

Bona Fide Residence Test

With the Bona Fide Residence test, it’s not about how many days you’re away — it’s about where your life is based.

• What it measures: Whether you’ve made a foreign country your true home for an entire tax year.
• Best for: Long-term expats with a stable residence and strong ties abroad.
• Key benefit: Can qualify you for the FEIE even if you spend less than 330 days outside the U.S.

Substantial Presence Test

This one flips the script — it’s about proving how much time you spend in the U.S.

• What it measures: The number of days you’re physically present in the U.S. (mainly for non-U.S. citizens figuring out if they’re considered U.S. residents for tax purposes).
• Best for: Foreign nationals living or working in the U.S., not U.S. expats.
• Key risk: Triggering U.S. tax residency when you didn’t intend to.

Choosing the right test

Picking the right test comes down to your lifestyle, travel patterns, and where your “tax home” really is.

• If you travel often and don’t stay in one place long, the physical presence test is usually simplest.
• If you’ve planted roots in one country, the bona fide residence test may be a better fit.
• If you’re a non-U.S. citizen spending significant time in the U.S., watch the substantial presence test to avoid an accidental U.S. tax bill.

Tax benefits and implications for U.S. expats

The physical presence test opens the door to some serious tax perks. Here’s what’s on the table for U.S. expats, resident aliens, and green card holders who qualify.

Key tax benefits

Once you meet the 330-day requirement, you may be able to:

• Claim the Foreign Earned Income Exclusion (FEIE): Leave a portion of your foreign income off your U.S. tax return.
• Use the Foreign Housing Exclusion or Deduction: Reduce your taxable income even further by excluding eligible housing costs abroad.
• Access certain income tax exemptions: In some cases, lower your U.S. tax bill significantly — even to zero — if your foreign income falls under the FEIE limit.

How it affects your U.S. tax return

Qualifying for the FEIE changes how your return looks and what forms you’ll need.

• You’ll file Form 2555 with your federal return to claim the exclusion.
• Your foreign income still needs to be reported — it’s excluded, not ignored.
• Dual residents and nonresidents may have extra reporting requirements depending on treaties and other tax rules.

FEIE vs. Foreign Tax Credit

Sometimes the FEIE isn’t the best option — or you may combine it strategically with the Foreign Tax Credit (FTC).

• FEIE advantage: Great if you earn income in a low-tax country and want to remove it from U.S. taxation entirely.
• FTC advantage: Useful if you’re paying high taxes abroad — it can offset your U.S. tax liability dollar for dollar.
• In some cases, a mix of both gives the best result.

Common mistakes and how to avoid them

For U.S. taxpayers claiming the physical presence test, the rules seem straightforward — until you start counting days and filling out your income tax return. Whether you’re a settled expatriate or a globe-trotting American expat with a complex travel schedule, even one small misstep can cost you the Foreign Earned Income Exclusion and lead to extra IRS scrutiny.

Here are the most common ways people fail the test — and how to avoid them:

• Miscounting qualifying days: Remember: 330 full days means midnight-to-midnight in a foreign country. Travel days to or from the U.S. don’t count toward your minimum time requirement.
• Breaking the 12-month window: Your qualifying period must be consecutive months, not a random collection of dates. Sliding the 12-month window can help you keep short U.S. visits from ruining your count.
• Ignoring the tax home rule: Passing the day count isn’t enough — you also need a tax home abroad. Keeping your main home or family base in the U.S. can jeopardize your residency status for FEIE purposes.
• Counting non-qualifying locations: Time in international waters, U.S. possessions, or foreign airspace mid-flight doesn’t qualify under U.S. law, no matter how far from home it feels.
• Overlooking income sourcing rules: Work done while in the U.S. is U.S.-source income and can’t be excluded — even if your employer or clients are overseas. This is especially important for those with self-employment income.
• Under-documenting your days: Without solid proof — passport stamps, travel logs, leases, utility bills — it’s your word against the IRS. Weak records make tax filing harder and increase the risk of losing the exclusion.

Navigating expat tax with confidence

The physical presence test can be the key to unlocking the Foreign Earned Income Exclusion and keeping more of your money where it belongs — with you, not the IRS. Pass it, and you’re one big step closer to avoiding double taxation as a U.S. expat.

At Bright!Tax, we specialize in helping Americans abroad meet the minimum time requirements, protect their residency status, and file a flawless income tax return. Our CPAs know the rules inside out — so you can focus on living your life abroad while we handle the numbers.Ready to see if you qualify? Talk to a Bright!Tax CPA today and let’s get your FEIE claim squared away before tax season sneaks up again.

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