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Old 14.04.2010, 12:21
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US Tax Form 2555 Help, please

Hi there,
In 2009, I worked in Swiss for 10 months, travel to Asia for 1 month and was on vacation in US for 1 month. This is my first year filing using 2555. I think I fit more on the Physical Presence test. I have a few questions whilst filing in F2555:

1) Do I need to fill in only Part III (Physical Presence Test)? without filling Part II (Bona Fide test). Does filling both parts is obligatory?

2) When I fill No 18 (a) to (f), do I need to calculate the salary whilst I was on VACATION in the US?

Background Fact: I was a US employee to a US company, got paid by US company in $ with all and only US taxes withheld, direct deposited to my US bank account whilst I performed a 10 month work in Swiss.

Thanks
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Old 14.04.2010, 12:37
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Re: US Tax Form 2555 Help, please

1. I believe you fill in either Part III or Part 2 which ever one fits your situation.

2. If you were only on vacation whilst abroad then you didnt earn anything whilste there.

Double check though
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Old 14.04.2010, 21:47
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Re: US Tax Form 2555 Help, please

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Hi there,
In 2009, I worked in Swiss for 10 months, travel to Asia for 1 month and was on vacation in US for 1 month. This is my first year filing using 2555. I think I fit more on the Physical Presence test. I have a few questions whilst filing in F2555:

1) Do I need to fill in only Part III (Physical Presence Test)? without filling Part II (Bona Fide test). Does filling both parts is obligatory?

2) When I fill No 18 (a) to (f), do I need to calculate the salary whilst I was on VACATION in the US?

Background Fact: I was a US employee to a US company, got paid by US company in $ with all and only US taxes withheld, direct deposited to my US bank account whilst I performed a 10 month work in Swiss.

Thanks
You choose which basis to qualify under: physical presence or bona fide residence. You don't complete the other part.

You pay US taxes on wages earned for work performed in the USA unless a tax treaty says otherwise. The same is true for FICA/SET, and unless there is a totalization treaty (as there is between the USA and Switzerland, and most other European countries) you may pay social security tax to two countries.

The tax treaty will provide for a credit to the other country for tax paid to the one that is entitled to tax the income first. The mathematics of taxation being what they are, the credit may not make you whole. Then there is Alternative Minimum Tax, a whole other story.
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Old 16.04.2010, 18:29
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Re: US Tax Form 2555 Help, please

I'll disagree with Andy02 & Kevlegs a bit - I don't find anything in the Instructions that force you to choose between the "resident" or "physical presence" test to claim the exclusion. The advantage of claiming both is that, if the IRS wishes to challenge your claim, they must challenge both tests.

However, from your description (and I'm only going by what you wrote) it is not clear you qualify for either.

The "bona fide resident" test "involves your intention...about your stay." Do you intend to stay in CH for an indefinite period, or were you sent there by your employer for a specified (or for a limited) period? If the latter, you don't qualify.

The "physical presence" test requires that you are outside of the US for 330 full days in the tax year. (You need to be able to document that). If you can, you're clear, but the burden of record-keeping is on you.

Last, but not least, if you are on a salary, then of course you were earning an income while on vacation. (You would have received a paycheck for that period of time.)

None of the above is meant to be discouraging, but only to emphasize you should read the form's instructions very carefully.
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