Can't e-file due to foreign earned income exclusion

[meganbd]

I e-file annually and consistently qualify for the foreign earned income exclusion without issue. This year, I am receiving a notice that I am unable to e-file because the withheld tax (around $7k, based on foreign earned income) exceeds my taxable income (around $1k, consisting of interest and dividends not subject to the foreign exclusion). 

This has never happened before and I've triple checked that everything is entered as usual. Any ideas on how to resolve? 

[Limmitch123]

I have the same problem. What is the answer?

[Spino]

The standards for e-filing can change. Assuming that the forms have been released--foreign earned income is often one of the last, you may have to actually mail in your return. I did have to do this at least once when I was living internationally (15 years.)

[meganbd]

I spent 2 hours on the phone with 3 different TurboTax specialists and they were unable to find a solution. Seems to be some new glitch. I ended up filing with H&R Block Expat without issue. Really unfortunate since I've used TurboTax for the past 6+ years and this has never been a problem!

[mhboddie]

Had the same issue.  Thanks for posting.  Onwards to H&R Block

[Danielle_B]

You can add $1 of Interest Income (put your bank name or even just "Bank").  That will allow you to eFile and should not change your tax result.

[fern123]

I am experiencing the same issue this year (2025). I have e-filed in the same way for the last 5 years, so don't know why this is becoming an issue now. Is anyone else experiencing this too? Turbotax has not been helpful and it is frustrating because I already paid but likely wont be able to file with them. 

[DaveF1006]

It depends. I don't know what all of your scenarios involved but let's take the first example given by @meganbd .  Here, Megan states that she received $1k in income and $7K in taxes were withheld. ‌This is impossible because how can you pay more taxes than income?‌ Here's what I think is happening. 

I think in Megan's case, she's trying to exclude her foreign income and claim the Foreign Tax Credit she paid against that income.  You can't claim both simultaneously. The foreign income exclusion limit for this year is $126,500 per taxpayer. ‌If you claim a Foreign Income Exclusion up to that threshold, you can't claim a foreign tax credit. You can claim a Foreign Tax Credit on any foreign income over $126,500.

If this doesn't address your specific issue, let me know and we may need to investigate this further.

@fern123 

@mhboddie 

[ozsmiffy]

This $1 investment income idea allowed me to efile with the FEIE.   Thanks.