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Foreign income exclusion

Forum|Forum|5 years ago
January 5, 2021
2 replies
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I am trying to file a return with only foreign income and claim the foreign income exclusion and am getting reference code #499. Does anyone know how to resolve this issue? I would greatly appreciate it since I have been on hold for over an hour waiting for Lacerte rep to answer....

Lacerte Tax

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Best answer by itonewbie

Wow, now you have me thinking that prior years were incorrect. Lisa Ihm is the one who guided me in regards to the treaty issue and now am going to look back to 2015 and beyond.

Thank you!

NP, @kristinacoley. Please come back and let us know what you find out, especially if you discover more facts than you have shared.

rbynaker

Level 13

1) You can't efile a $0 return. See this article.

2) You can't efile anything now anyway.

3) If you like to run with scissors you can probably add $1 of interest income and efile once IRS opens back up (probably later this month).

K

kristinacoleyAuthor

Level 3

Thank you for taking the time to answer!

T

TaxGuyBill

Level 15

Add $1 of taxable interest (or "other income") and it should work fine.

It can't be e-filed if things like AGI, etc. are all $0. So adding $1 of interest gets around that.

EDIT: Rick beat me to it. 🙂

K

kristinacoleyAuthor

Level 3

So adding in $1 to interest income worked, thank you! My other issue with this one is that it takes the return to zero and in the past due to the UK and US having a treaty, this client was able to get additional child tax credits and this time it is not giving a dime and just want to make sure I am not missing any entries. From what I understand, because the foreign income exclusion has been taken in the past, I cannot take the foreign tax credit in following years. Do you have knowledge on these pieces?

I appreciate you taking the time to reply to my original post, this one has me stumped for sure!

itonewbie

Level 15

@kristinacoley What you stated is not correct. CTC has nothing to do with the US-UK DTA; on what basis do you believe that your client should be allowed the credit based on the treaty?

Are you sure claiming FEIE would produce the optimal result, if your client is in the UK, given the effective tax rate there would generally be higher?

In any case, Lacerte/PTO are NOT capable of handling FTC when FEIE is claimed by taxpayers in fiscal year countries like the UK. Overrides with offline computations will need to be made and statements prepared offline will need to be attached to the return to supplement the stock statement which awkwardly shows the override for scaledown ratio.

Lacerte/PTO will also be wrong if FEIE involves income that should be sourced to multiple prior or future years (such as stock options or various types of bonuses). This is due to the lack of a proper coding option - the system permits only coding to prior/future years and does not differentiate whether only a portion should be sourced to the year immediately prior or after.

Intuit has been made aware of these technically incorrect issues for years but does not see these as a priority even though returns prepared by unaware preparers, relying on the built-in tax logic in these professional tax products, will be incorrect and will create unnecessary exposures to both the preparers and the clients they serve.

@TheBoris Hi, Boris, could you please escalate this again and give us an update? Thanks!

---------------------------------------------------------------------------------Still an AllStar

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