Can I visit the US and not jeopardize my tax status?

June 3, 2012 8:54 PM

Help me with a "24 hour rule" in regards to expat taxes and being in transit.

I'm working on a foreign deployment/contract for the next year or two and have encountered a tax question that I cannot find the answer to.

The IRS states the following:

"If you are in transit between two points outside the United States and are physically present in the United States for less than 24 hours, you are not treated as present in the United States during the transit. You are treated as traveling over areas not within any foreign country. "

I live very close to the DFW Airport. If I'm flying in from overseas, can I actually leave the airport itself and visit friends, as long as I fly back out within 24 hours and not have it count against the "physical presence test?"

The way I read this, as long as my outbound flight taking me out of the US again leaves within 24 hours of my inbound one, I should be ok. I just don't know if I can actually leave the airport or not, since that will involve going through US Customs.

I have sent email queries to a couple different expat CPA firms but have received no responses, and I cannot find any Google results that address this particular question.

posted by drstein to work & money (7 answers total)

I think you're slightly incorrect. I think that as long as your outbound flight passes into a foreign country (not over the ocean) prior to 24 hours after your inbound flight ceased being over a foreign country you don't lose any days. When the flight arrives in the US or leaves the US is irrelevant for that calculation.

If you mess it up, it looks like you lose a minimum of two days, your day of departure and your day of arrival.

The clause you're asking about just states that as long as you leave the US within 24 hours of arriving, which I would assume for safety's sake is the time your flight first passes over US territory, your transit does not count as having been in the US, it counts as having been (for example) over international waters.

It doesn't seem to make a difference whether you clear customs or not. The section would be completely inoperative relative to many airports if you couldn't clear customs. Most US airports, even the ones that accept international passengers, don't have transit lounges. That means all arrivals have to clear immigration and customs. (DFW didn't until Terminal D was finished, and even now I'm seeing conflicting reports as to whether or not it is used)

I'm not a CPA, attorney, or even a tax preparer, though.
posted by wierdo at 9:44 PM on June 3, 2012

Bleh, that came out a bit mangled, but I think you can see what I'm trying to get at. Be careful about your actual transit time and have fun on your stop at home.
posted by wierdo at 9:46 PM on June 3, 2012

IANATL,

I think common sense would apply, the 24 hours would most likely be considered against the scheduled arrival and departure times. I wouldn't think leaving the airport would matter. Imagine arriving in Newark and departing again from JFK.
posted by michswiss at 6:45 AM on June 4, 2012

I think this will depend not so much on the law as how the IRS chooses to interpret "in transit." I would either call them or an experienced CPA.
posted by zippy at 12:51 PM on June 4, 2012

I'm somebody who's had to calculate my comings & goings for the physical presence test before, and in reading your question, I'm wondering: is it likely to make a difference for you? i.e. Are you really going to be back in the US for 30+ days during a year of your contract?

MeMail me if you want my expat specialist CPA's information.
posted by knile at 2:24 PM on June 4, 2012

"is it likely to make a difference for you? i.e. Are you really going to be back in the US for 30+ days during a year of your contract? "

It's quite possible. We are on a 90 on, 30 off rotation, and in my transit through the United States, I'll be going in & out of DFW. On the second year of the contract, I'm tempted to be back here a little bit more, but not if I lose the *entire* exemption. Someone else told me that you basically get taxes around $60/day for each day you're under the 330 rule, but someone else told me that if you're under 330 you lose the entire exemption.
posted by drstein at 4:18 PM on June 5, 2012

Update: I finally did get an answer from an expert in expat taxes.

Say that I left London, England and flew to Cancun, Mexico via DFW airport. As long as the entire trip length is under 24 hours, I can clear customs in DFW and go have dinner nearby or something and it won't count against me.
posted by drstein at 7:42 PM on June 27, 2012