Hello, My total taxable income is zero (I live abroad and can claim the foreign tax credit), but my tax liability is showing as $54 and I can't figure out why?

[tuck0066]

I do have an investment account with Schwab, but my total US income from interest & dividends is still well under the standard deduction of $14,600.

[pk]

@tuck0066  please tell me a little bit more  about the situation ;

Need approx. figures  for  Foreign gross income ( before exclusion  ), gross US sourced income, the country that is your tax home, did you participate in local Social Security equivalent ?

Note that generally and only for  tax liability computation, your tax is calculated based on your world income without regard to  exclusion.  Then from this tax liability ( world income ),  the allocated tax on  excluded income is subtracted, giving you the final  US tax amount.  Thus there may be some tax ( because of higher tax bracket caused  by  excluded income).

I will circle back once I hear from you .

[tuck0066]

@pk  My Foreign Gross Income is roughly $126K, US sourced income is roughly 1K, tax residency is France and I do pay social security tax here.  Unless I am missing something, with taking the standard deduction, I should still owe $0, right? 

[pk]

@tuck0066 ,  you are correct in that if the figures you provided  --  your gross Foreign Income is all excluded  per form 2555 and your ONLY   US income is approx. 1000, then   your  world tax liability should be zero.  I was assuming that you had some residual /un-excluded  FE income that could have resulted in a small   residual US tax liability.

Assumimng that you are using Windows download version  ( such as   Home & Business ),  and you can go into forms mode  look at  the forms involved -- 2555,  1040 and  Foreign EI tax worksheet.  These should be enough to see where TT is getting  the  "due " amount.  I would be most interested in what is wrong.

pk

[tuck0066]

@pk Apologies, it took me a while to circle back!  I was finally able to finalize my return (had to pay before I could actually see it), and it says I owe $54 in net investment income tax.   But shouldn't this be zero'ed out if I take the standard deductible? 

[ThomasM125]

No, the standard deduction is subtracted from your income to determine your taxable income for federal income tax. The net investment tax is a separate tax on your investment income and the standard deduction does not apply to that.