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Old 05-19-2015, 12:25 AM
  #10  
Tax Pilot
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Joined APC: May 2015
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Note that there have been some recent cases [Lisa Hamilton Savary, Petitioner v. Commissioner of Internal Revenue, Respondent; Rogers v. Commissioner, T.C. Memo, 2009-111; Clark v. Commissioner, T.C. Memo. 2008-71]
concerning pilots and crew trying to claim the foreign earned income exclusion under either the bona-fide residence or physical presence test when they live abroad.

One big item that seems to be consistently ignored is that flight time over international airspace is not considered a foreign workday. You must actually be flying over a foreign country or its territorial waters for such time to be considered a foreign work day for foreign earned income exclusion purposes.

In the event of audit, such oversight can be end up resulting in a huge amount of tax due plus 20% negligence penalty!
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