Hi Everyone –
We hope everyone is healthy and staying safe. This newsletter will focus on our international clients abroad, and the updates just issued by the IRS for COVID-19 impacts to the 330-day foreign earned income exclusion.
We understand that many of you have been unable to leave the United States in recent weeks to meet your originally intended days overseas.
Surprisingly, the IRS has released two Revenue Procedures within the last 10 days that outline guidance for those that had to leave their overseas post early due to civil unrest and/or COVID-19. Both of these Revenue Procedures are VERY TAXPAYER FRIENDLY and should result in a number of people qualifying for a partial foreign earned income exclusion.
2020 DEPARTURES FROM ANY FOREIGN COUNTRY DUE TO COVID-19 (Rev. Proc. 2020-20)
On April 21, 2020, the U.S. Internal Revenue Service released Revenue Procedure 2020-20 which provides a waiver for the time requirements for individuals electing to exclude their foreign earned income because of leaving the foreign country due to the COVID-19 emergency based on certain departure dates.
| Country | Date of Departure on or After |
| China | December 1, 2019 |
| Globally | February 1, 2020 |
The period covered by this revenue procedure ends on July 15, 2020, unless an extension is announced by the Treasury Department and IRS.
2019 DEPARTURES FROM IRAQ & SUDAN (Rev. Proc. 2020-14)
On April 13, 2020, the U.S. Internal Revenue Service released Revenue Procedure 2020-14 which provides a waiver for the time requirements for individuals electing to exclude their foreign earned income because of war, civil unrest, or similar adverse conditions in that country.
The five countries that are covered by this waiver include the following:
| Country | Date of Departure on or After |
| Congo (Democratic Republic of the) | January 13, 2019 |
| Haiti | May 14, 2019 |
| Iraq | May 14, 2019 |
| Sudan | April 11, 2019 |
| Venezuela | January 24, 2019 |
WHY THIS MATTERS
Individuals who would otherwise qualify for the foreign earned income and housing exclusions, may lose the benefit of these exclusions if they leave a country prior to fulfilling the time requirements, which could affect the amount of tax assessed.
A special exception to the time requirements to qualify for these exclusions is allowed to individuals who are forced to leave countries designated by the IRS due to war, civil unrest, or other adverse conditions. AND NOW ANOTHER EXCEPTION HAS BEEN MADE DUE TO THE COVID-19 EMERGENCY. THIS MAY ALLOW YOU TO CLAIM THE 330 DAY EXCLUSION FOR 2019 AND/OR 2020 EVEN IF YOU DID NOT MEET THE 330 DAY TEST.
To qualify for relief an individual must have established residency, or have been physically present, in the foreign country on or before the applicable dates specified above.
EXAMPLE
Under this revenue procedure, an individual who was present in the Afghanistan on January 1 through March 1, 2020, establishes that he or she reasonably expected to work in Afghanistan for the entire calendar year (for example a contract), but departed Afghanistan on March 2, 2020, due to the COVID-19 Emergency, and returns to Afghanistan on August 25, 2020, for the remainder of the calendar year, would be a qualified individual for 2020 with respect to the period between January 1 through March 1, 2020, and August 25 through December 31, 2020, assuming the individual has met the other requirements for qualification under section 911.
NEXT STEPS
Please reach out to us with any questions and to discuss your facts. Remember, you would need to have been able to qualify for the foreign earned income exclusion if not for the civil unrest or COVID-19 events taking place. It is still important to have your days overseas documented with passport stamps, flight itineraries, employment contracts, LOAs, etc. We are expecting increased scrutiny from the IRS for these specific claims and refunds filed under this provision so retaining documentation will be critically important.