topic Negative taxable income in Business & farm

Negative taxable income

cmallow17 — Wed, 13 Nov 2024 23:37:59 GMT

Hello!

I am self-employed and because I live and work overseas (thus qualifying for the foreign earned income exclusion), I am expecting to have a negative taxable income. What are some strategies I could use to improve the situation? (i.e., move deductions to credits?)

I’ve already maxed out my business expenses to limit the SE tax. Thank you!

Re: Negative taxable income

Cindy4 — Wed, 13 Nov 2024 23:47:56 GMT

It sounds like you may have a Net Operating Loss carryover available to carry forward to next year to offset some income then. If you used TurboTax this year, it should automatically carry over. If not, you can enter it in the "Other Business Situations" section. It is also possible some items may qualify to be used as a general business credit. You can read more about that here.

Hope this helps!

Cindy

Re: Negative taxable income

cmallow17 — Wed, 13 Nov 2024 23:51:29 GMT

Hi Cindy!

Thanks for your message. Just to clarify, I do have an operating profit, but I’m able to exclude up to $126,500 for the foreign earned income exclusion. My profit is under that amount, so after the standard deduction, I have negative taxable income. Please let me know if that changes anything with your advice. Thank you so much!

Re: Negative taxable income

Cindy4 — Thu, 14 Nov 2024 00:08:31 GMT

Neither the FEIE or the Standard Deduction can reduce your taxable income below zero, so there will be no carryover in this case. Thank you for clarifying!!!

Re: Negative taxable income

cmallow17 — Sat, 16 Nov 2024 03:07:35 GMT

Thank you, Cindy, for your advice!