topic Foreign Earned Income Exclusion Bug in Deductions & credits

Foreign Earned Income Exclusion Bug

rc11 — Mon, 10 Feb 2020 01:22:59 GMT

It looks like I am eligible for the Foreign Earned Income Exclusion; however, the software is still taxing me on my Foreign Earned Income.

Re: Foreign Earned Income Exclusion Bug

ThomasM125 — Mon, 10 Feb 2020 02:38:39 GMT

You may have a problem with this because of the dates you entered. I suggest you contact us so an agent can do a screen share with you to see what you entered. Please use this link to find ways to contact us:

https://ttlc.intuit.com/community/using-turbotax/help/what-is-the-turbotax-phone-number/00/25632

Re: Foreign Earned Income Exclusion Bug

pk — Mon, 10 Feb 2020 05:09:13 GMT

@rc11 , can you give us the dates / data-- (a) departure from the USA; (b) arrival date in the foreign land; (c) is this your first year abroad; (d) are you US citizen/Resident ( green Card ); (e) which country ; (f) are you employed by a foreign entity or self-employed abroad. This should give enough information to answer query.

Re: Foreign Earned Income Exclusion Bug

rc11 — Wed, 12 Feb 2020 02:55:13 GMT

a/b) Never lived in the US. Immigrated to the US on 9/13/19.

c) N/A

d) Green Card

e) Peru

f) Yes, all salary was earned prior to 9/13

---

Note: This is filing as a joint married application. One is a USA citizen, the other is a foreign spouse.

Re: Foreign Earned Income Exclusion Bug

pk — Wed, 12 Feb 2020 03:49:53 GMT

@rc11 you basically have two choices ----

(1) because you entered the country in the last quarter of the year and you are trying to exclude from US taxes earnings from a foreign source prior to entering the USA as an immigrant, you and your spouse could file as Married Filing Sep ( MFS ). This would allow you to claim Non-resident alien till the date of entry and therefore ONLY US sourced income during the Non-Resident period will count -- since there is none you essentially file a short year 09/13/2019 thru 12/31/2019 on form 1040 claiming world earnings during that period.

(2) File as Married Fling Joint and this would be for the whole year and be taxed on your world income -- it would be much more convoluted but will achieve exclusion of your foreign earnings up to the limit ( Jan 1 , 2019 through Sep 8, 2019 ) . However, because your earnings were self-employed , you would also be subject to Self-Employment Tax ( 15.3% of net earnings for Social Security and Medicare ). even on the excluded amount.

Is there more I can do for you ?

Re: Foreign Earned Income Exclusion Bug

rc11 — Thu, 13 Feb 2020 12:47:48 GMT

However, because your earnings were self-employed , you would also be subject to Self-Employment Tax ( 15.3% of net earnings for Social Security and Medicare ). even on the excluded amount.

This is very helpful, thanks! I believe this part is why I was confused about being qualified for the exclusion, however, I was still being taxed.