Edelman wrote:Cressers, from your actual name in your profile you seem to be American, not Finnish. The "substantial presence test" is something only relevant to non-Americans to determine if they are a US resident.
If you are indeed American, then you are a US resident based on your US citizenship. You would file a US return reporting your worldwide income for the whole year. The next question is how do you reduce the US tax because you have foreign (Finnish) income and are paying Finnish income taxes. Two possibilities that can be used separately, or together, to accomplish this:
(1) You may be eligible to exclude outright the foreign earned income (FEI) under the FEI exclusion (form 2555). One way to qualify is the "physical presence test" which is what you might have been thinking of. The other test is the "bona fide residence test" but you cannot meet that until you have been resident in a foreign country for a period that includes at least one full calendar year.
(2) The other alternative is to take a foreign tax credit (form 1116) against the US proportional tax on your Finnish income because you have paid Finnish income tax on that income.
Due to changes in the US tax rules from 2006 on, the exclusion method is not as interesting as it once was for someone paying high foreign income taxes. If you have not used the FEI exclusion in the past, you may want to not-exclude, and just use the foreign tax credit alone. I can be of assistance should you choose to follow fskrc1's advice...