Coronavirus & Foreign Earned Income Exclusion 2020 qualification changes

At a glance

Did COVID-19 disrupt your time spent abroad? You still may be able to qualify for the Foreign Earned Income Exclusion on your 2020 taxes. Learn more with H&R Block.

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Coronavirus has turned our world upside-down, launching us all into uncharted territory. While everyone has been affected by the pandemic, it’s created unique challenges for U.S. expats. Take, for example, eligibility for the Foreign Earned Income Exclusion in 2020.

Foreign Earned Income Exclusion eligibility in normal times

If you wanted to claim the 2020 Foreign Earned Income Exclusion (FEIE) in normal times, you’d have to have a permanent home overseas and pass either the Bona Fide Residency Test or the Physical Presence Test—both of which have a requirement that you spend a certain number of days in your resident country.

To qualify for the Bona Fide Residency Test, you’d have to have a proven tax home in a foreign country and have lived there for an uninterrupted 12-month period including an entire tax year. For the Physical Presence Test, you’d have to be in that foreign country for 330 full days during a consecutive 12-month period.

Travel bans, quarantines, and closed borders caused many expats to postpone a planned move, become stranded in their existing country, or have to move back to the U.S. unexpectedly. As a result of this disrupted time, many would normally fail to qualify for the Foreign Earned Income Exclusion on their 2020 taxes.

Changes to eligibility for the 2020 FEIE and foreign housing cost due to COVID-19

To help out these U.S. expats, the IRS provided relief for U.S. expats wanting to qualify for the 2020 Foreign Earned Income Exclusion. This 2020 FEIE waiver waives the time abroad thresholds for the FEIE and foreign housing exclusion if the taxpayer fled their resident country due to Coronavirus within a specific time frame.

You qualify for the FEIE COVID-19 relief if:

  • You were required to leave China, Hong Kong, or Macau between December 1, 2019, and July 15, 2020
  • You were living abroad in another country and were required to leave between February 1, 2020, and July 15, 2020

How to claim the Coronavirus FEIE time abroad waiver on your 2020 taxes

Does either of the above describe your situation? Then you qualify for the COVID-19 2020 Foreign Earned Income Exclusion time abroad waiver.

To claim the waiver, you’d write “Revenue Procedure 2020-27” in the top margin of a fully filled-out Form 2555, the form you file to claim the FEIE. You’ll then attach it to your 2020 tax return. If you’re filing with H&R Block Expat Tax Services, we will take care of all this for you, so you can focus on staying safe and getting your life back to normal.

H&R Block is here to help with your 2020 FEIE waiver

All of us at H&R Block Expat Tax Services are working tirelessly to stay on top of all the COVID-19 tax changes, and we’re here to help you navigate them. After you upload your documents to your expat tax portal, we’ll match you with an advisor who will guide you through the process and make sure to get you as many credits, exclusions, and deductions as possible.

During these times it’s important you take care of yourself, and we’re happy to take the stress of taxes off your shoulders. Get started today and let us take care of the rest!

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