Question

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?

Forum|Forum|1 year ago
February 23, 2025
1 reply
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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.

P

pk12_2

@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 .

T

tuck0066Author

@pk12_2 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?

P

pk12_2

@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