I have been a resident of the USA since 2012 and became a US citizen in May 2018. I moved out of the USA in October 2017 and in 2018 I visited the USA in two occasions and stayed for 31 and 2 days (counted as described in the Form 2555 instructions).
In 2018 I have been living in the Netherlands while working for as an employee for a Dutch employer. During the 31 days stay, I was on vacation for a couple of days, but was otherwise working remotely for my employer, conducting my usual tasks (programming, as I'm a software developer). While in the USA, I did not conduct any entrepreneurial/business activity, neither as myself, nor on behalf or benefit of my employer.
I plan on using Form 2555-EZ Foreign Earned Income exclusion under the Physical Presence tests (330 days outside the USA), however, in the trips section, I need to declare how many of the days I was in the USA are "days on business". The relevant part of the 2555EZ instructions define "days on business" as:
Line 12 Complete columns (a) through (d) if you were present in the United States or any of its possessions in 2018. Don't include time spent in the United States or its possessions before your period of bona fide residence or physical presence, whichever applies, began or after it ended. Column (d). Enter, in U.S. dollars, the amount of income earned in the United States on business (such as meetings or conventions). Attach a statement showing how you determined the amount. Don't include this income on line 17. Even if you live and work in a foreign country, any income earned during the time spent in the United States on business is considered U.S. source income and can't be excluded.
1) So, do the wages payed by me in those 29 days of remote working for my employer in the US count as "business" income?
2) If so, should I pro-rate my yearly wages to 29/365? In this case, can I use Form 1116 to exclude foreign taxes? Do I need to pro-rate the deductions too (I think I will take the standard deduction)? While in the USA, I chose to pay a month of rent to a co-working space to be able to work outside my US accomodation (AirBNB room). Can this be considered a "business expense" then, and can this be deducted from the prorated US soil income?
3) I entered the Netherlands (I'm a citizen of another EU member state) on January 7th, started by job on January 15th (as stated in the employment contract) but only managed to register as Netherlands resident on January 23rd. What is my "tax home residency" start date?
According to Publication 901, page 10:
Income that residents of the Netherlands receive for employment in the United States (dependent personal services) is exempt from U.S. income tax if the following three requirements are met.
The resident is in the United States for no more than 183 days during the tax year.
The income is paid by, or on behalf of, an employer who is not a U.S. resident.
The income is not borne by a permanent establishment or fixed base the employer has in the United States.
Which does indeed seem to apply to my case: I'm a resident of the Netherlands, my employer is Dutch and my employer has no permanent base in the USA.
So... is actually Form 2555 needed at all? Can't I just use Form 8833 "TreatyBased Return Position Disclosure Under Section 6114 or 7701(b)"?