How Do I Qualify as a Bona Fide Resident of a Foreign Country?
- What Is the Bona Fide Residence Test?
- What Are the Five Requirements To Qualify?
- Do I Qualify For the Bona Fide Residence Test? Six Real-World Examples
- How Is This Different From the Physical Presence Test?
- What Other Tax Benefits Can I Claim?
- How Do I Prepare To Qualify?
- What If I Don't Qualify for Bona Fide Residence?
- Get Expert Help With Your Expat Taxes
- Related Resources
According to the IRS, 62% of expats owe $0 in U.S. taxes after applying available exclusions and credits. The bona fide residence test is one of two ways you can unlock the Foreign Earned Income Exclusion (FEIE), which lets you exclude up to $130,000 of your 2025 foreign income (filed in 2026) from U.S. taxation.
Whether you’re a long-term expat, corporate employee on international assignment, or planning a permanent move abroad, understanding and qualifying for the bona fide residence test can save you thousands of dollars on your U.S. tax bill.
What makes you a bona fide resident? You must establish genuine residence in a foreign country for an uninterrupted period that includes one full tax year (January 1 through December 31). This means showing that you’ve truly relocated your life abroad, not just taken an extended vacation or temporary work assignment.
The good news: once you qualify, you can claim the FEIE for the entire time you remain a bona fide resident, even if you take trips back to the U.S. to visit family or handle business.
This guide will walk you through exactly what the IRS requires, show you real examples of who qualifies (and who doesn’t), and help you determine if you meet the requirements to claim this valuable tax benefit.
What Is the Bona Fide Residence Test?
The bona fide residence test determines whether you’re genuinely a resident of a foreign country for U.S. tax purposes. It’s one of two tests you can use to qualify for the Foreign Earned Income Exclusion, the other being the physical presence test.
Why it matters: If you pass the bona fide residence test, you can exclude up to $130,000 of your 2025 foreign-earned income from U.S. taxation. If you also have qualifying housing costs, you may be able to exclude even more through the Foreign Housing Exclusion.
The bona fide residence test is generally more flexible than the physical presence test because:
- You can take unlimited trips back to the U.S. without losing your status
- You don’t need to count every single day spent abroad
- Once you establish bona fide residence, you can claim the FEIE for your entire residency period
Bona fide residency is about where you genuinely live, not just where you physically are. The IRS looks at your intentions, connections, and the nature of your stay abroad.
Bona Fide Residence Is Not Just About Days Abroad.
What Are the Five Requirements To Qualify?
To qualify as a bona fide resident of a foreign country and claim the FEIE, you must meet all five requirements:
1. You must be a U.S. citizen or resident alien
- U.S. citizens qualify automatically
- Resident aliens must be citizens or nationals of a country with which the U.S. has an income tax treaty
2. You must establish a tax home in a foreign country
- Your tax home is where you regularly work, not just where you live
- You cannot maintain your principal place of business in the U.S.
- Having a U.S. address for mail doesn’t disqualify you
3. You must be a resident for one full tax year
- Residency must include an entire calendar year (January 1 through December 31)
- The full year doesn’t have to be your first year abroad
- Brief trips to the U.S. are allowed as long as you maintain your foreign residence
4. You must intend to stay indefinitely
- You cannot plan to return to the U.S. after a specific period
- Temporary work assignments with fixed end dates don’t qualify
- Student visas and other temporary visas typically don’t meet this requirement
- Green card holders living abroad can qualify
5. You must actively earn foreign income
- Salary, wages, or self-employment income from work performed abroad
- Unearned income (dividends, interest, pensions) doesn’t qualify for the FEIE
Learn more about earned vs. unearned income
Exception: You may waive the time requirements if you had to leave a foreign country due to war, civil unrest, or similar dangerous conditions. The IRS publishes a list of countries where this exception applies.
Do I Qualify For the Bona Fide Residence Test? Six Real-World Examples
These examples show what does and doesn’t meet the IRS requirements for bona fide residence.
Example 1: Split-Year Living (Does Not Qualify)
Sarah is an American citizen who bought a home in Ireland. She spends six months in Ireland and six months in the U.S. every year.
Result: Sarah does not pass the bona fide residence test. To qualify, she must reside in Ireland for at least one complete tax year (from January 1 to December 31). Since she only spends half the year there, she hasn’t established a genuine residence in Ireland.
Example 2: Perpetual Traveler (Does Not Qualify)
Miguel, an American citizen, sells his home in the U.S. and travels the world, staying in hotels, hostels, and with host families. He never stays in any single country for more than a few months.
Result: Miguel does not pass the bona fide residence test. Since he doesn’t establish residence in one country for a full tax year, he cannot claim bona fide resident status. He might qualify under the physical presence test if he spends 330 days abroad in a 12-month period.
Example 3: Fixed-Term Assignment (Does Not Qualify)
Chris, an American, moved to Turkey in 2025 for a three-year work assignment. He lives exclusively in Turkey during this time and doesn’t return to the U.S. However, he knows his work assignment will end in 2028, after which he will return to the U.S.
Result: Chris does not pass the bona fide residence test. Although he has lived in Turkey for full tax years, his plan to return to the U.S. after a set period indicates that he hasn’t established indefinite residence. His temporary assignment doesn’t meet the “intent to stay indefinitely” requirement.
Example 4: Partial Tax Year (Does Not Qualify)
Adriana relocated from the U.S. to Germany in July 2025, intending to stay permanently. However, by July 2026, she changed her plans and moves back to the U.S.
Result: Adriana does not pass the bona fide residence test. While she lived in Germany for 12 months, she wasn’t there for a complete tax year (January 1 through December 31 of any single year). She would need to stay through at least December 31, 2026, to qualify.
Example 5: Permanent Relocation (Qualifies)
Jack accepted a job in China and moved from the U.S. to Beijing in November 2025. By December 2026, he will still be living in China with no plans to return to the U.S.
Result: Jack passes the bona fide residence test. He lived in China for at least one full tax year (all of 2026), earns foreign income, and has no current plans to return to the U.S. He can claim the FEIE starting January 1, 2026, even though he arrived in November 2025.
Example 6: Brief U.S. Visit (Qualifies)
Abby moved to India with her family on January 1, 2025. During the year, her aunt in the U.S. falls ill, so she returns to the U.S. for three weeks to care for her. Afterward, she returns to India, finds a job, and remains there through 2026 with no plans to leave.
Result: Abby passes the bona fide residence test. She maintains a residence in India, stays there for a full tax year, earns foreign income, and has no plans to move back to the U.S. Her brief return to the U.S. doesn’t disqualify her, as long as she maintained her residence in India and intended to return. She can claim the FEIE starting with her 2025 tax return.
How Is This Different From the Physical Presence Test?
The bona fide residence test and the physical presence test both allow you to claim the FEIE, but they have different requirements.
Bona Fide Residence Test:
- Based on where you genuinely live and work
- Requires one full tax year (January 1-December 31)
- Unlimited trips to the U.S. allowed
- Must show intent to stay indefinitely
- Cannot have a fixed end date to your foreign stay
Physical Presence Test:
- Based on counting days abroad
- Requires 330 full days abroad in any 12-month period
- Can work for any 12-month moving period
- No need to prove intent or establish residence
- Works for digital nomads and temporary assignments
Which is better for you? If you’ve made a genuine move abroad with no plans to return soon, the bona fide residence test is usually easier. If you’re on a temporary assignment, travel frequently, or prefer the precision of counting days, the physical presence test may be more suitable.
Good news: You only need to meet one test to claim the FEIE, not both.
What Other Tax Benefits Can I Claim?
Beyond the FEIE, bona fide residents can access other valuable tax benefits:
Foreign Housing Exclusion or Deduction:
- Exclude or deduct qualifying housing costs above a base amount
- Includes rent, utilities (except phone and TV), property insurance, and more
- Can significantly increase your total exclusion beyond the $130,000 FEIE
- Learn more about the Foreign Housing Exclusion
Foreign Tax Credit:
- Claim a dollar-for-dollar credit for foreign income taxes you paid
- Can be used instead of or in combination with the FEIE
- Often better if you live in a high-tax country
- Read our complete Foreign Tax Credit guide
If you choose to use the Foreign Tax Credit instead of the FEIE, you cannot switch back to claiming the FEIE for five years. Work with a qualified expat tax advisor to determine the best strategy for your situation.
How Do I Prepare To Qualify?
If you’re planning to establish bona fide residence or need to prove your status, follow these steps:
Before You Move:
- Gather employment contracts or acceptance letters showing permanent positions abroad
- Collect any documentation showing you’re closing out your U.S. life (selling property, terminating leases)
- Establish a tax home in your new country before January 1 of a tax year, if possible
While Living Abroad:
- Keep lease agreements or property purchase documents
- Maintain utility bills and other proof of foreign address
- Document your employment and income sources
- Track any trips to the U.S. (dates of arrival and departure)
- Keep records showing the family moved with you, if applicable
- Maintain evidence of community ties (club memberships, local bank accounts, voter registration if allowed)
For Tax Filing:
- File Form 2555 with your Form 1040 to claim the FEIE
- Keep detailed records in case the IRS requests additional proof
- Consider working with an expat tax specialist who can help structure your filing correctly
The IRS may request documentation years after you file, so keep thorough records of your foreign residence throughout your time abroad.
What If I Don’t Qualify for Bona Fide Residence?
If you don’t meet the requirements for bona fide residence, you have other options to reduce or eliminate your U.S. tax on foreign income:
Physical Presence Test:
- Spend at least 330 full days in foreign countries during any 12-month period
- Works for temporary assignments and frequent travelers
- More flexible for digital nomads and location-independent workers
- Learn more about qualifying under physical presence
Foreign Tax Credit Only:
- Don’t claim the FEIE at all
- Use only the Foreign Tax Credit for foreign taxes you paid
- Better option if you live in a high-tax country
- Allows you to claim credits for all foreign income, not just earned income
- No residency or physical presence requirements needed
Combination Strategy:
- Use the FEIE to exclude earned income up to $130,000
- Use the Foreign Tax Credit for income above the FEIE limit
- Claim housing exclusion for qualifying expenses
- This often provides the maximum tax savings
Every expat’s situation is unique. The best strategy depends on your income level, where you live, the types of income you earn, and your long-term financial goals.
Get Expert Help With Your Expat Taxes
Determining whether you qualify as a bona fide resident and choosing the right tax strategy can be complex. Make one wrong choice, and you could miss out on thousands in tax savings or face a five-year penalty period before you can switch strategies.
Ready to get started? If you’re ready to be matched with a Greenback accountant, click the Get Started button below. For general questions on US expat taxes or working with Greenback, contact our Customer Champions.
We Help Expats Apply Bona Fide Residence Correctly.
This article is provided for general information purposes only and should not be construed as legal or tax advice. Each individual’s tax situation is unique. You should consult with a qualified tax professional regarding your specific circumstances. Greenback Expat Tax Services offers personalized guidance tailored to your particular situation.
Related Resources
Understanding FEIE:
- Foreign Earned Income Exclusion Complete Guide
- Bona Fide Residence vs. Physical Presence Test
- Foreign Housing Exclusion
Other Tax Benefits:
For Specific Situations:
