Volunteer Income Tax Assistance (VITA) Certification Practice Test

If a U.S. citizen lived outside the U.S. for 330 full days in a 12-month period, do they qualify for an exemption?

1. Yes; they qualify for an exemption.

2. No; they must reside in the U.S.

3. Yes; but only under certain conditions.

4. No; they must have a valid reason for being outside.

The correct answer is: Yes; they qualify for an exemption.

A U.S. citizen who lived outside the U.S. for 330 full days in a 12-month period qualifies for the Foreign Earned Income Exclusion, which is part of the criteria necessary to claim an exemption from U.S. federal income tax on their foreign earned income. The specific requirement for this exclusion is meeting the physical presence test, which states that the individual must be physically present in a foreign country for at least 330 full days during a period of 12 consecutive months. This provision is designed to alleviate the double taxation burden on U.S. citizens who earn income abroad. As long as the individual has met the time requirement, they can claim the exemption even if they have not established permanent residency in a foreign country. Their citizenship status does not disqualify them from utilizing the exclusion based on their time spent outside the U.S. Thus, living abroad for the specified duration directly supports eligibility for the exemption from U.S. taxes on foreign income, affirming the correctness of the provided answer.