Can 12 mo period overlap for foreign exclusion

[Randall]

This is a different client from BBall player mentioned earlier in a post.

Can the same twelve month period overlap for two tax years?  Client was outside US from April 2022 to April 2023.  We used that 12 month period for his 330 day period.  And filed his 2022 tax return in April 2023.  He remained in that country until Dec 2023.  Can we use the calendar year 2023 for the 12 month period where he is out of US for 330 days.  And qualify for the exclusion in 2023 also?

[TaxCPANY]

From Pub. 54, How to Figure the 12-Month Period:  "In determining whether the 12-month period falls within a longer stay in the foreign country, 12-month periods can overlap one another."

[Randall]

That's what I was thinking.  Page 20 of Pub 54 gives an example.  Someone on another discussion group is saying he can only exclude income from Jan thru April of the 2nd year.  That doesn't make sense.  He excluded income from April to Dec 2022.  And was over there until Dec 2023.  Why couldn't he exclude income from Jan thru Nov 2023.  If he qualifies and you use the overlapping 12 month continuous year to qualify each tax year (both 2022 and 2023).

[TaxCPANY]

Yes, ANY 12-consecutive-month period in which a taxpayer overseas drops by the U.S. for no more than 35 days can be used to qualify for the Physical Presence Test (PPT).  For instance, their second bout of PPT might even carry into 2024 for as many of the 35-day limit as hadn't been used during 2023.  E.g., suppose your client stayed overseas *every day* from Jan 1, 2023 through Nov 30, 2023.  They not only could claim 2023's entire amount of earned-income (AND housing) exclusion(s), but also the first four day's worth of 2024's exclusion amounts.
Not only can consecutive years contain overlapping PPT periods, but the unused 35-day limit before AND after PPTs can be used to maximize claimable exclusion amounts.  Reg. Sec. 1.911-3(d)(3).

[Randall]

7 hours ago, TaxCPANY said:

Yes, ANY 12-consecutive-month period in which a taxpayer overseas drops by the U.S. for no more than 35 days can be used to qualify for the Physical Presence Test (PPT).  For instance, their second bout of PPT might even carry into 2024 for as many of the 35-day limit as hadn't been used during 2023.  E.g., suppose your client stayed overseas *every day* from Jan 1, 2023 through Nov 30, 2023.  They not only could claim 2023's entire amount of earned-income (AND housing) exclusion(s), but also the first four day's worth of 2024's exclusion amounts.
Not only can consecutive years contain overlapping PPT periods, but the unused 35-day limit before AND after PPTs can be used to maximize claimable exclusion amounts.  Reg. Sec. 1.911-3(d)(3).

Thanks for the reference.