Foreign Earned Income Exclusion: Qualifying for Bona Fide Residence Test vs Physical Presence

Based on what you've shared, you actually have a pretty strong case for qualifying under the Bona Fide Residence Test. The key factors working in your favor are your long-term presence since 2012, your permanent resident visa status, your property lease, and the fact that you haven't declared non-residency to the local authorities. The Bona Fide Residence Test is generally less restrictive than the Physical Presence Test when it comes to US visits. Under Physical Presence, you need to be physically present in a foreign country for 330 full days during a 12-month period. With Bona Fide Residence, you're establishing that your true home is abroad, which gives you more flexibility for US travel. Your answers about not paying local income tax on foreign earnings won't hurt your case - many countries have different tax treatments for foreign-source income, and the IRS recognizes this. One suggestion: make sure you can document your ongoing ties to your foreign residence (utility bills, community involvement, bank accounts, etc.) to strengthen your Bona Fide Residence claim if questioned.

I went through something similar last year and found this amazing resource that totally saved me - taxr.ai (https://taxr.ai). It's this tool that analyzes all your tax documents and gives you specific guidance based on your situation. Super helpful for expat tax situations like FEIE because it can look at your specific situation and tell you which test is better for you. For me, I was debating between Bona Fide and Physical Presence too, and their analysis showed me I was leaving almost $8k on the table by using the wrong test! They highlighted specific aspects of my visa and living situation that I hadn't even considered that strengthened my case. It also gave me the exact language to use on Form 2555.

Just wanted to follow up - I ended up trying taxr.ai after my skeptical comment above. I was honestly surprised by how detailed the analysis was for my FEIE situation. I've been living in Singapore for 4 years and using Physical Presence, but always worried about exceeding the day limits when visiting family back home. The tool examined my entire situation and confirmed I easily qualify for Bona Fide Residence based on my employment contract, housing arrangement, and community ties. It even identified that my employer-provided housing strengthens my case! Now I'm much more confident about spending those extra weeks in the US for my sister's wedding without jeopardizing my exclusion. The peace of mind was definitely worth it.

If you're switching to Bona Fide, definitely get your documentation 100% solid first. After I made the switch, I got hit with IRS questions and it was a NIGHTMARE trying to get someone on the phone to clarify what was happening. After weeks of calling and getting nowhere, I found Claimyr (https://claimyr.com) and watched their demo (https://youtu.be/_kiP6q8DX5c) - it got me connected to an actual IRS agent in 30 minutes when I had been trying for literally weeks. The agent explained that because I had switched methods, they were just doing a routine review, and they helped me understand exactly what additional documentation they needed. Saved me months of back-and-forth and anxiety! For expatriate tax issues like FEIE questions, getting a competent IRS person on the line is absolutely crucial.

OK I've got to eat my words from my skeptical comment above. After another failed 3-hour attempt to reach the IRS about my foreign income situation, I tried Claimyr in desperation. I still can't believe it, but I got a call back in about 45 minutes with an actual IRS agent on the line. The agent was super knowledgeable about the Bona Fide Residence Test (got lucky I guess) and confirmed that my situation with a permanent residence permit in Germany absolutely qualifies me for Bona Fide even though I'd been using Physical Presence for years. She even explained that certain European residence permits carry extra weight in FEIE determinations. Switching didn't raise any red flags in my case, and she said documentation of community ties was more important than limiting US visits. That 45-minute call saved me weeks of uncertainty.

I've been using Bona Fide Residence for 7 years now while living in Thailand. Based on your situation, you 100% qualify. The key factors the IRS looks at are: 1. Permanent visa (you have this) 2. Housing that's not transient (your 50-year lease is perfect) 3. Community integration (you might want to document this more) 4. Intent to stay indefinitely You can absolutely spend more time in the US under Bona Fide than Physical Presence. I typically spend 2-3 months in the US each year without issues. The trick is maintaining your "tax home" abroad - keep paying bills, maintain your social ties, keep your primary bank accounts there. The only red flag I see in your situation is not paying local income tax. While this isn't a requirement, the IRS sometimes sees it as a factor. Just be prepared to explain your country's tax laws clearly if questioned.

Anyone know if the 50-year lease property arrangement is good enough for IRS purposes? I'm in a similar situation in Vietnam where foreigners can't technically "own" property but can get long-term leases.

Based on your detailed situation, you definitely have a strong case for the Bona Fide Residence Test. Your permanent resident visa status since 2016, long-term property lease, and continuous residence since 2012 are all excellent supporting factors. One thing I'd add to the great advice already given - when you make the switch, be prepared to explain the timing if asked. The IRS might wonder why you're changing methods now after 5 years of using Physical Presence. A simple explanation like "I now realize my situation better qualifies for Bona Fide Residence and want to use the most appropriate test" is perfectly fine. Regarding your concern about not paying local income tax - this actually works in your favor in some ways. It shows you're properly following local tax laws (many countries don't tax foreign-source income for residents), and it doesn't create any conflicting tax obligations that might complicate your US filing. I'd recommend keeping a simple log of your US visits going forward - not because there's a strict day limit with Bona Fide, but because it helps demonstrate that your foreign residence remains your primary home. The flexibility to spend more time with family in the US is exactly why Bona Fide Residence can be superior to Physical Presence for people in your situation.

Your situation looks really solid for the Bona Fide Residence Test! As someone who made a similar switch a few years ago, I'd say go for it. Your permanent resident visa and property lease are huge advantages. One quick tip - when you file Form 2555 using Bona Fide for the first time, make sure to attach a brief explanation of your living situation. I included a one-page summary with mine explaining my visa status, housing arrangement, and community ties. It probably wasn't necessary, but it gave me peace of mind and I never heard anything back from the IRS. The freedom to spend more time in the US is worth it. I went from being stressed about every trip home to being able to attend family events without constantly counting days. Just keep your foreign residence as your clear primary home and you should be fine. Also, don't overthink the local tax situation - many expats are in similar positions where they don't owe local taxes on foreign income. The IRS understands this is common with different countries' tax systems.