Q&A: If I take a cruise departing from the States, how will it affect my Physical Presence Test?

Posted by Don W on August 2, 2010 under Expatriate Taxes

Q: I am a US expat living in Brazil.  I am trying to find some data on US expats taking cruises. I recall something about if a cruise departs from a US port, it will still be considered as time in the US and would count against the physical presence requirements. I have checked the IRS website as well as the State Dept Travel website, but I have been unsuccessful in finding the answer to this question.

A: If you are living in Brazil, then your tax home is Brazil.  That doesn’t change because you are on a cruise for a week or two. In this instance, you are still outside of the US and you have established a tax home already.

However, all bets are off if you are wondering if you can live on a cruise ship and also qualify for the Foreign Earned Income Exclusion.

The Physical Presence Test has two parts:

  • Tax Home
  • 330 days

You must meet both.  For more information on this test check out the Foreign Earned Income Exclusion section of the Expat Tax Basics page on our main site.