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IRS Waives Foreign Income Reporting Requirements for Refugees from Ukraine and Five Other Countries

S.J. Steinhardt
Published Date:
Mar 15, 2023

The IRS has revised its guidance on foreign income reporting requirements for people fleeing conflict and other “adverse conditions” in certain foreign countries, including Ukraine.

Revenue Procedure 2023-19, issued on Monday, provides a waiver, under Section 911(d)(4) of the Tax Code, of the time requirements for individuals who exclude their foreign-earned income when they must leave a foreign country because of war, civil unrest or similar adverse conditions in that country.

Section 911 allows a "qualified individual," as defined in that section, to “elect to exclude from gross income the foreign earned income and to exclude or deduct the housing cost amount of such individual.”

The IRS has previously listed countries for which the eligibility requirements of section 911(d)(1) are waived under section 911(d)(4). This notice added Ethiopia, Iraq, Ukraine, Belarus, China and Mali to the existing list after determining “that war, civil unrest, or similar adverse conditions precluded the normal conduct of business” in those countries beginning on the specified dates of departure or after that date. They are:

Ethiopia: Jan. 3, 2022

Iraq: Jan.14, 2022

Ukraine: Feb. 12, 2022

Belarus: Feb. 28, 2022

China: April 11, 2022

Mali: July 29, 2022

"Generally, U.S. citizens or resident aliens living and working abroad are taxed on their worldwide income," said the IRS, Accounting Today reported. "However, if their tax home is in a foreign country and they meet either the bona fide residence test or the physical presence test, they can choose to exclude from their income a limited amount of their foreign earned income ($120,000 for 2022). Both the bona fide residence test and the physical presence test contain minimum time requirements."

To qualify for relief, “an individual must have established residency, or have been physically present, in the foreign country on or before the date” a determination was made that that individuals were required to leave the foreign country.

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