Bona Fide Residence Test

Definition

One of two qualifying tests a U.S. taxpayer must pass to claim the Foreign Earned Income Exclusion, requiring that the individual has established a genuine, long-term residence in a foreign country for an uninterrupted period that includes an entire tax year. Unlike the physical presence test, this test is fact-and-circumstances based and considers intent, lifestyle, and ties to the foreign country rather than a strict day count. CPAs must evaluate factors such as housing arrangements, family location, and visa status when applying this test.