US Expat FEIE &
Physical Presence Test Tracker

The Physical Presence Test (PPT) is one of two methods a US citizen or resident alien can use to qualify for the Foreign Earned Income Exclusion under IRC § 911. Unlike the Bona Fide Residence Test — which requires you to establish bona fide residency in a foreign country for a full tax year — the PPT is purely mechanical: you must be physically present in a foreign country or countries for at least 330 full days during any consecutive 12-month period.

That 12-month period does not have to align with the calendar year. A freelancer who left the US on March 15, 2024, for example, could test from March 15, 2024, through March 14, 2025 — a period straddling two tax years. This flexibility allows digital nomads and expats to optimize which tax year the exclusion applies to. However, you can only exclude income that was earned during the days you were actually outside the United States within that qualifying period.

The strictest part of the PPT is the day-count rule. Partial days count as full US days. If you fly from London to New York for a meeting and return the next morning, both your arrival and departure days typically count as US days. Even a domestic US airport layover en route between two foreign countries can count as a US day under certain interpretations. This is why careful itinerary tracking is essential — and why this tool exists.

The IRS adjusts the Foreign Earned Income Exclusion limit annually for inflation. For tax year 2025, the projected maximum exclusion is $130,000. If you qualify under the Physical Presence Test (or the Bona Fide Residence Test), you can exclude up to this amount from your US federal income tax. Income above the exclusion limit — and any US-sourced income — remains subject to ordinary federal income tax rates.

A common misconception among new expats is that the FEIE eliminates their entire US tax liability. In reality, it only excludes qualifying earned income (wages, salary, or net self-employment income) up to the annual cap. It does not apply to passive income such as dividends, capital gains, rental income, or Social Security benefits. Additionally, self-employment tax (SE tax) — the 15.3% FICA equivalent for freelancers — still applies to all foreign self-employment income, even the excluded portion. This is a critical distinction that surprises many self-employed digital nomads.

One of the most dangerous blind spots for US expats is the assumption that the FEIE eliminates all their US tax liability. State taxes are entirely separate from federal taxes, and several states aggressively assert the right to continue taxing former residents who they consider to still be domiciled within the state. These are often called "sticky states" — and their residency rules can be extremely aggressive.

California, for example, requires you to formally establish domicile in another state before it will relinquish its right to tax your income. Simply moving abroad while maintaining a California driver's license, bank account, or return intent can result in the state treating you as a California resident — subject to California's top marginal tax rate of 13.3%, even on income you've excluded federally. New York, Virginia, and South Carolina apply similarly aggressive rules. Breaking residency with a sticky state before going abroad — with proper documentation — is one of the most important pre-departure steps an expat can take.

The safest strategy for long-term digital nomads is to establish domicile in a no-income-tax state before departing the US. This requires more than just updating your mailing address — you should update your driver's license, voter registration, banking records, and any legal documents to reflect your new domicile state. Keep thorough records of your last physical presence in each state. An expat CPA familiar with state residency rules is invaluable here.