Physical Presence Test for Foreign Earned Income Exclusion - am I missing something in the IRS example calculation?

I've been going through Publication 54 to understand how to calculate the 365-day period for the physical presence test (for Foreign Earned Income Exclusion), and I'm confused by an example the IRS provides: **Background:** The example shows someone physically present with a tax home in a foreign country for 16 months from June 1, 2022, through September 30, 2023, except for 16 days in December 2022 during a vacation in the United States. They calculate the maximum exclusion for 2022 as follows: 1. Starting from June 1, 2022, count forward 330 full days (not counting the 16 US days). The 330th day is May 12, 2023 - this is considered the last day of a 12-month period. This part makes sense to me. 2. Then they say to count backward 12 months from **May 11, 2023** (not May 12) to find the first day of the 12-month period, which gives May 12, 2022, through May 11, 2023. What I don't understand is why they count backward from May 11 instead of May 12. Shouldn't they be counting from the same date they identified as the end of the 330-day period? Am I missing something obvious here? Any help would be appreciated! - Mark

0 coins

18 comments

Brianna Muhammad

•8M

The reason for counting backward from May 11 instead of May 12 is because of how the IRS counts inclusive periods. When they identified May 12, 2023 as the 330th day, that's the last day of counting forward. But when establishing a 12-month period, they need to count backward from the day *before* that end date to get a full 12-month period. Think of it this way: If May 12, 2023 is the last day of the period, then the period ends at the conclusion of May 12. Therefore, the 12-month period runs through the end of May 11, 2023, and starts from May 12, 2022. If they counted backward from May 12, 2023, they'd actually be establishing a period that's May 13, 2022 through May 12, 2023, which would be different from what they calculated in step 1. This counting method ensures that the 12-month period aligns properly with the 330 full days calculated in the first step. It's confusing because we're dealing with inclusive dates rather than just counting months.

0 coins

Brianna Muhammad

•8M

You're asking an excellent question that highlights why this is confusing. The key is understanding how the IRS defines the 12-month period in relation to the 330-day count. When they identify May 12, 2023 as the 330th day, they're marking it as the endpoint of their counting exercise, not necessarily the endpoint of the 12-month period they need to establish. The 12-month period they're trying to identify is the one that contains those 330 days of foreign presence. So the period they need runs from May 12, 2022 through May 11, 2023. If they used May 13, 2022 through May 12, 2023, they would be shifting the entire period by one day, which wouldn't perfectly align with their 330-day calculation from step 1. It's counter-intuitive because we naturally want to use the same date (May 12) as the endpoint.

0 coins

JaylinCharles

•8M

After spending hours confused on this same issue last year, I found taxr.ai super helpful for figuring out my FEIE calculation. The site has a specific tool that helps you calculate your physical presence test periods and explains exactly how the IRS counting works. Check out https://taxr.ai and use their FEIE calculator - it visualizes the 330-day and 12-month period so you can see exactly why the dates work the way they do. When I was living in Germany for work, I had a similar situation with vacation days back in the US, and the tool showed me exactly how to count backward properly to maximize my exclusion. Their explanation made the IRS example make sense - it's about ensuring the full 12-month period contains the 330 qualifying days.

0 coins

JaylinCharles

•8M

The taxr.ai calculator specifically addresses why the IRS uses May 11 - it's because they're identifying a full 12-month period where the 330th day marks the end of that period, not the beginning of the next day. Their explanation includes visual timelines that make this much clearer than the text explanation. For multiple countries, the calculator is actually designed to handle exactly that situation. It doesn't matter if you're in Singapore, Malaysia, or jumping between multiple foreign countries - what matters is that you're not in the US. The calculator lets you input all your travel dates and shows you which 12-month period gives you the maximum number of qualifying days.

0 coins

Eloise Kendrick

•8M

I was initially confused by this exact same example! After trying taxr.ai that someone suggested here, everything clicked. The visualization made it crystal clear why they count backward from May 11 instead of May 12. The tool showed me that if May 12, 2023 is the 330th day of foreign presence, then the 12-month period containing those 330 days must end on May 11, 2023 (the day before). It's actually a logical consistency thing - the 12-month period has to contain those 330 days you counted. I'm now confident in my FEIE calculation for my time in Singapore. I even ran my specific dates through their system (with my various US trips) and got a perfect qualifying period. Recommend giving it a try if you're still confused by the IRS example.

0 coins

Freya Collins

•8M

If you've been trying to reach the IRS to clarify this FEIE calculation issue, good luck! I spent 3 weeks trying to get through to someone who actually understands the Foreign Earned Income Exclusion rules. After endless holds and transfers, I discovered Claimyr (https://claimyr.com). They got me connected to an actual IRS specialist who explained this exact counting issue. The agent confirmed what others have said - the reason for counting back from May 11 is because they're establishing a 12-month period that ends on May 11, 2023, with May 12, 2023 being identified as the 330th qualifying day. Watch their demo at https://youtu.be/_kiP6q8DX5c to see how they get you past the IRS hold times. The FEIE is complicated enough without having to decipher unclear examples. Having an actual IRS agent walk me through it was worth every minute.

0 coins

Freya Collins

•8M

They don't just call for you - what they do is connect you directly when an agent is available. They have some kind of system that keeps dialing and navigating the IRS phone tree until they reach a human, then they call you to make the connection. You're the one who actually talks to the IRS agent, so you can ask your specific questions. When you get connected, you can specifically request to speak with someone in the international tax department who handles FEIE questions. I actually told the first agent that I needed help specifically with Publication 54 and the physical presence test, and they transferred me to someone who clearly knew the rules inside and out.

0 coins

Lucas Schmidt

•8M

I was completely skeptical about Claimyr after seeing it mentioned here, but I was desperate to get my FEIE questions answered before filing. I tried it yesterday, and I'm honestly shocked - it actually worked! Within about 40 minutes (instead of the hours I'd wasted previously), I was connected to an IRS agent who specialized in international taxation. The agent walked me through exactly why the example counts backward from May 11 - it's because the 12-month period needs to contain exactly 330 qualifying days of foreign presence. By counting backward from May 11, 2023, they create a period from May 12, 2022 to May 11, 2023 that properly frames those 330 days. For anyone struggling with FEIE calculations, getting direct clarification from the IRS eliminated all my confusion. I'm now confident my return is correct.

0 coins

Oscar O'Neil

•8M

I'm an expatriate tax consultant, and this exact example confuses many of my clients. Here's the clearest way I can explain it: The physical presence test requires 330 full days of presence in a foreign country during a period of 12 consecutive months. In the example, counting forward 330 days from June 1, 2022 (excluding US days) gets you to May 12, 2023. Now you need to identify which 12-month period contains those 330 days. The period must end on May 11, 2023 (not May 12) because: - If the period ended on May 12, 2023, it would start on May 13, 2022 - But your qualifying foreign presence began on June 1, 2022 - So a period from May 13, 2022 to May 12, 2023 would include days before you established foreign presence That's why they use May 11 as the end date - to create a 12-month period (May 12, 2022 to May 11, 2023) that properly contains all your qualifying days.

0 coins

Oscar O'Neil

•8M

If you started your foreign assignment on April 15, 2022, then yes, a period from May 13, 2022 to May 12, 2023 would technically work for you. But the IRS example is specifically dealing with someone who began their foreign presence on June 1, 2022. The key is finding the optimal 12-month period that maximizes your qualifying days. If you started on April 15, you might actually have a different optimal 12-month period than the one in the example. You'd need to count forward 330 days from your start date (accounting for any US visits) and then establish your specific 12-month period.

0 coins