FEIE Physical Presence Test Explained: The 330-Day Rule

Who needs to read this

The physical presence test is the day-counting route to the foreign earned income exclusion, the main tool that lets Americans working abroad exclude a six-figure chunk of salary from US tax. Read this if:

• You're a US citizen or green card holder working overseas and want the exclusion without proving foreign residency
• You're a digital nomad moving between countries with no single foreign home base
• You're on a foreign assignment that started or ends mid-year and need to pick the right 12-month window
• You make regular US trips and need to know exactly how many days you can afford
• You're newly abroad and your first partial year depends entirely on this test

How the rule works

Under IRC § 911(d)(1)(B), you qualify if, "during any period of 12 consecutive months," you are "present in a foreign country or countries during at least 330 full days." Qualifying makes you eligible to exclude foreign earned income up to an indexed cap: $130,000 for tax year 2025 (up from $126,500 in 2024), claimed on Form 2555. The essentials:

• 330 full days, not 330 days. Partial days do not count. This is the opposite of most immigration rules, where any part of a day counts.
• Any 12 consecutive months. The window is yours to choose and does not need to match the calendar or tax year; it only has to include part of the year you are claiming.
• Foreign countries only. Days in the US, over international waters for 24 hours or more, or in US territories are not foreign days.
• A tax home abroad is also required. Day counting alone is not enough; your tax home (your main place of work) must be in a foreign country during the qualifying period.
• The exclusion prorates. If only part of your tax year falls inside the qualifying window, the cap scales by the ratio of qualifying days in the year.

Counting the days

A qualifying day is 24 consecutive hours in foreign countries, beginning and ending at midnight; everything else is a lost day, and you can only afford about 35 of those in your window. The travel rules from IRS guidance:

• US touchdowns burn the whole day. If you are in the US at any point during a day, that day is not a full foreign day.
• International waters and airspace count against you. Travel outside any foreign country lasting 24 hours or more costs days; a flight that leaves Japan and lands in Los Angeles loses both the departure remainder and the arrival day.
• Foreign-to-foreign moves are safe when the trip takes under 24 hours: flying Paris to Bangkok loses nothing.
• Transit through the US of less than 24 hours between two foreign points does not break the chain of presence, but the transit day itself is not a full foreign day.

A worked example: you leave New York on June 10, 2025, arriving in Lisbon on June 11. Your first full foreign day is June 12 (the first complete midnight-to-midnight day abroad). If you fly home for two weeks at Christmas, losing 16 days including travel, you can still reach 330 full days by around June 2026, and your best 12-month window is roughly June 12, 2025 to June 11, 2026. On your 2025 return, the exclusion prorates for the portion of 2025 inside that window.

Resets, extensions, and edge cases

Nothing about this test resets; you simply slide the 12-month window until 330 full foreign days fit inside it, if they can. The edge cases:

• Overlapping windows. Consecutive tax years can use overlapping 12-month periods, and you may pick each year's window to maximize that year's exclusion.
• The war and unrest waiver (IRC § 911(d)(4)): if you had to leave a country because of war, civil unrest, or similar adverse conditions, the IRS can treat the time requirement as met, provided you had a tax home there and could reasonably have expected to qualify. The IRS lists eligible countries and departure dates annually.
• Too many US days is fatal, not discountable. At 329 full foreign days the exclusion is zero for that window; there is no partial credit for near misses, only the option of finding a better window.
• The bona fide residence alternative: once you have a real foreign home and a full calendar year of residence, the bona fide residence test frees you from anxious day counting in later years. Many expats qualify on physical presence in year one and switch.
• Green card holders generally rely on physical presence (bona fide residence is limited to citizens and certain treaty-country residents).

Overstays: consequences and enforcement

Falling short of 330 days does not create a penalty; it silently deletes the benefit, which can mean US tax on your entire salary plus the risk of an audit adjustment years later. The IRS verifies day counts the same way you should keep them:

• Form 2555 requires your travel detail, including dates of US presence during the period
• CBP entry and exit records document every US touchdown independently of your memory
• An exclusion denied on audit means back taxes on up to the full excluded amount, plus interest and possible penalties
• State tax does not follow the FEIE. Some states do not recognize the exclusion, and a lingering state domicile can tax the income the IRS excluded

Staying compliant

Qualifying is a matter of protecting a 35-day budget for an entire year:

• Count full days, not trips. Log every border crossing and every US touchdown; iReside's US FEIE (Physical Presence) preset counts full foreign days midnight to midnight and shows your remaining US-day budget for the window.
• Book flights with the midnight rule in mind: a departure at 00:30 instead of 23:30 can save a full day.
• Reserve buffer days. Plan for 325 foreign days minimum before optional US trips; emergencies will spend the rest.
• Choose your window last. Qualify first, then slide the 12-month period to the position that maximizes the prorated exclusion.
• Keep boarding passes and passport stamps for the whole window; the burden of proving full days is yours.

Common mistakes

• Counting partial days. The immigration habit of counting arrival and departure days works exactly backwards here; only complete foreign days count.
• Forgetting international waters. A 25-hour crossing between foreign ports, or a long-haul flight to the US, quietly costs days people never logged.
• Locking the window to the calendar year. The 12-month period is movable, and picking it badly can shrink a full exclusion to a prorated sliver.
• Confusing FEIE qualification with not filing. You must still file a US return and claim the exclusion on Form 2555; qualifying silently does nothing.
• Assuming the test covers all income. Only foreign earned income qualifies; investment income, US-source pay, and amounts above the cap are still taxable.
• Cutting it to exactly 330. One diverted flight or family emergency below the line and the whole exclusion vanishes for that window.