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TAX PRACTICE & PROCEDURES

■ Globally, on or after Feb. 1, 2020, but
on or before July 15, 2020.
To qualify for the waiver in Rev. Proc.
The foreign earned income 2020-27, an individual ‘must establish that
exclusion but for those conditions the individual could
By way of background, the Sec. 911
foreign earned income exclusion is a reasonably have been expected to meet the
considerable benefit for those taxpay- eligibility requirements’ for the foreign earned
ers working abroad who meet certain
requirements for having a tax home income exclusion.
outside of the United States. For 2020,
the exclusion was $107,600 of foreign
earned income. The two options avail- country. The period covered for the qualified individual for 2020 with
able to qualify for the exclusion are the relief in the revenue procedure ended on respect to the period between January
bona fide residence test and the physical July 15, 2020. 1 through March 1, 2020, and August
presence test. To qualify for relief, an individual 25 through December 31, 2020, as-
These tests are defined in Sec. must have established residency or have suming the individual has met the
911(d)(1) as follows: been physically present in the foreign other requirements of qualification
■ Bona fide residence test: A person country on or before the applicable date under section 911.
who meets this test is “a citizen of specified. Therefore, an individual who
the United States and establishes to was first physically present or established Waiver disclosure requirement
the satisfaction of the Secretary that residency in China after Dec. 1, 2019, Taxpayers claiming this waiver for tax
he has been a bona fide resident of or another foreign country after Feb. 1, year 2019 or 2020 should write “Revenue
a foreign country or countries for an 2020, would not be eligible to use this Procedure 2020-27” across the top mar-
uninterrupted period which includes revenue procedure. gin of Form 2555, Foreign Earned Income,
an entire taxable year”; and Individuals who were present in the and attach it to their amended income
■ Physical presence test: A person foreign country before the specified start tax return. In addition, the taxpayer
who meets this test is “a citizen or dates, who seek to qualify for the exclu- should reaffirm, per Rev. Proc. 2020-27,
resident of the United States … who, sion because they could reasonably have that he or she “could reasonably have
during any period of 12 consecutive been expected to have been present in a been expected to have been present in a
months, is present in a foreign foreign country for 330 days but for the foreign country for 330 days but for the
country or countries during at least COVID-19 pandemic, and who have COVID-19 Emergency and have met
330 full days in such period.” met the other requirements for qualifica- the other requirements” to qualify for the
tion, may use any 12-month period to foreign earned income exclusion.
The emergency relief meet the qualified individual requirement. From Byron E. Shinn, CPA. ■
With the COVID-19 emergency shut-
ting down business globally, Treasury Example
provided the waiver described above The revenue procedure provides Contributors
based on a determination that the an example:
pandemic was “an adverse condition Mark Heroux, J.D., is a tax
that precluded the normal conduct of [A]n individual who was present in principal in the Tax Advocacy and
business.” To qualify for the waiver, an the United Kingdom on January 1 Controversy Services practice at
individual “must establish that but for through March 1, 2020, establishes Baker Tilly US LLP in Chicago.
those conditions the individual could that he or she reasonably expected to Byron E. Shinn, CPA, is a tax partner
reasonably have been expected to meet work in the United Kingdom for the with Carr, Riggs & Ingram LLC in
the eligibility requirements” for the for- entire calendar year, but departed the Bradenton, Fla. Both authors are
eign earned income exclusion. United Kingdom on March 2, 2020, members of the AICPA Tax Practice
As noted above, the period begin- due to the COVID-19 Emergency, & Procedures Committee. For more
ning in December 2019 is limited to and returns to the United Kingdom information on this column, contact
certain parts of China and, beginning on August 25, 2020, for the remain- thetaxadviser@aicpa.org.
in February 2020, applies to any foreign der of the calendar year, would be a

42 July 2022 The Tax Adviser