Ukraine, Iraq, Haiti and Bangladesh have been added to countries for tax year 2024 for which some requirements have been waived concerning foreign earned income exclusions.
Generally, U.S. citizens or resident aliens living and working abroad whose tax home is in a foreign country, and who meet either a bona fide residence test or a physical presence test, can choose to exclude from their income up to $126,500 for 2024 of their foreign earned income. Both the bona fide residence test and the physical presence test contain minimum time requirements.
The Internal Revenue Code defines the term “qualified individual” in regard to these taxpayers as either:
- An individual whose tax home is in a foreign country and who is a U.S. citizen and establishes that they have been a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire taxable year; or,
- A citizen or resident of the U.S. who during any 12 consecutive months is in a foreign country or countries during at least 330 full days.
The Secretary of the Treasury and the Secretary of State have determined that such conditions precluded the normal conduct of business and affected taxpayers who left the Ukraine on or after Jan. 13, 2024; Iraq on or after Jan. 18, 2024; Haiti on or after Jan. 23, 2024; and Bangladesh on or after Aug. 5, 2024.
For example, an individual who left Ukraine on or after Jan. 13, 2024, will be treated as a qualified individual with respect to the period during which that individual was a bona fide resident of, or was present in, Ukraine if the individual establishes a reasonable expectation that he or she would have met the requirements of Section 911(d) but for those conditions.
The revenue procedure is scheduled for publication in the Internal Revenue Bulletin on March 24.
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