36.3 Qualifying for the Foreign Earned Income Exclusion
You may elect the exclusion for foreign earned income only if your tax home is in a foreign country and you meet either the foreign residence test or the foreign physical presence test of 330 days. The foreign residence and physical presence tests are discussed in 36.5. Tax home is discussed at 20.6–20.8. If your tax home is in the U.S., you may not claim the exclusion but may claim the foreign tax credit and your living expenses while away from home if you meet the rules in 20.9 for temporary assignments that are expected to last, and actually do last, for one year or less. U.S. government employees may not claim either the earned income exclusion or housing exclusion based on government pay.
Exclusion prorated on a daily basis.
If you qualify under the foreign residence or physical presence test for only part of 2012, the $95,100 exclusion limit is reduced on a daily basis.
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