# Best tax preparation software for international issues



## Alltimegreat1

As far as expats are concerned, I think I have a somewhat straightforward tax situation, but there are a few things I think could make my return a bit complicated.

I'm a US citizen married to a German national. We have been living together in Germany since 2011 without interruption. Our son was born in April 2015 and has both a German and a US passport.

Up to now I have been filing an FEIE (married filing separately). Now I want to switch to the FTC this year in order to claim the $1,000 ACTC. We earned less than 110,000 combined in 2015. I plan to request an ITIN for my wife so we can file jointly.

What would be the best tax preparation software at dealing with all of these issues? I'm willing to pay.


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## BBCWatcher

Start with the free editions of TaxAct.com, TaxSlayer.com, and/or some other tax preparation software. See if they meet your needs. (They do for most.) If so, you're all set.

Please note that if you skip the FEIE then, assuming you don't reestablish U.S. residence for a period of time, you'll need a tax ruling from the IRS if you ever want to start taking the FEIE again, a tax ruling that isn't by any means guaranteed. Also please check whether you can switch to Head of Household filing status for tax year 2015. Unlike Married Filing Jointly, HoH doesn't require that your German spouse making a Section 6013(g) election, so it's a much simpler tax filing approach since it's still only you (and your child). And it might result in the same financial outcome for the household: $1,000 in free money from the IRS plus some amount of "banked" excess Foreign Tax Credit. That's the hope, anyway.


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## Bevdeforges

TaxAct and TaxSlayer seem to be the tax preparation softwares that are both free (at least if you are talking about the current year) and capable of handling foreign addresses and the various forms you tend to need when filing from overseas. You can either download the software to use on your computer or use the online version, saving your work to the website directly.

Be careful about switching from FEIE to FTC. As BBC said, you may not have the option to switch back in future years - or at least not easily. Try filing as Head of Household first. It may get you what you want without having to drag your NRA (non-resident alien) spouse into it.
Cheers,
Bev


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## Alltimegreat1

So I can still get the $1000 child tax credit if I file as head of household and use the FEIE?


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## BBCWatcher

Bevdeforges said:


> Be careful about switching from FEIE to FTC.


Please note that we're not saying "Don't do it." The Additional Child Tax Credit, worth up to $1,000 in free money from the IRS per qualified child, is (mostly) incompatible with the FEIE. We're just pointing out that once you skip the FEIE it's difficult to switch back, that's all. Of course, if you really would have been better off skipping the FEIE anyway, and accumulating excess FTCs, and you can reasonably expect the same or similar in the future, then it's an even easier decision.

And it's difficult but not impossible to switch back to the FEIE. Notably, a period of U.S. residence should allow you to switch back in the future. (How much residence "resets" your FEIE? Well, I'd have to research that. I'm not sure.)

One way you could qualify for the ACTC while still taking the FEIE (if you want) is to earn even a relatively small amount of income from work that you cannot exclude via the FEIE. For example, let's suppose you earn $50,000 per year or about $1,000 per week. And let's suppose you can earn that same income in the U.S. If you spend a couple weeks in the U.S. working there (at $1,000 per week). That should be enough to "cover" the ACTC even if you take the FEIE. I think that's how that all works.

Don't forget the Child and Dependent Care Expenses tax credit if you qualify, especially if you're skipping the FEIE. That should help open up a bigger gap between your German income tax rate and your hypothetical U.S. income tax rate in order to boost your FTCs. Head of Household (and MFJ) let you take that particular credit, and it's a nice one that's fairly common when you have young children and you're working.


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## expatwien

It's worth noting that you can restore the FEIE after 5 years, without getting IRS approval.

-----------------------
from
https://www.irs.gov/Individuals/Int...cation-of-the-Foreign-Earned-Income-Exclusion

'If you revoked a choice and within 5 tax years again wish to choose the same exclusion, you must apply for IRS approval. You do this by requesting a ruling from the Internal Revenue Service.'
-----------------------

Claiming the FTC is much more complicated that claiming the FEIE, and you will probably be stuck having to use tax software every year you claim the FTC. However, you should be able to claim the Additional Child Tax Credit every year for the forseeable future.

I have used TaxAct in a similar situation. It fully supports the FTC, but can be quite confusing in this area. TaxAct also changed its pricing structure this year, and it appears that the free version no longer supports things like the FTC. The online version for about $15, and the downloadable version (now about $30) support the FTC.

As the others have commented, Head of Household status should be possible to you. That will save many headaches relative to getting an ITIN for your spouse.


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## Bevdeforges

Oh foo! I was just getting ready to download the new version of TaxAct for some planning stuff - but if it costs, I'll have to put it off. (I don't have to file again this year due to lack of income.) Thanks for the information, at least.

Wouldn't you know they pull this the year the IRS offices overseas have closed. The French IRS office used to post information about which Free e-file services were usable by overseas residents.
Cheers,
Bev


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## BBCWatcher

Yes, there's some bad news on the tax preparation software front for tax year 2015.

Unfortunately it looks like TaxSlayer.com downgraded its free edition as well. For tax year 2015 it appears that TaxSlayer only supports Form 1040EZ in its free edition. That's a nonstarter for U.S. persons living overseas.

TurboTax Free Edition is limited to 1040EZ and 1040A, so no go there.

The IRS's "Free File" options are still available and particularly attractive if your income is below $62,000.

From what I can tell H&R Block's Free Edition still supports 1040 and 1116 (Foreign Tax Credit). H&R Block supposedly has one of the strongest mobile applications (for Apple iOS and Google Android devices), so you don't need a PC or wired Internet connection to use it. It's possible that H&R Block Free Edition may be the low cost winner for overseas filers this tax year. (We'll see.)

Note that some tax preparation software vendors may not support e-filing unless you're a U.S. resident (or at least have a U.S. mailing address, which you're allowed to do if you wish and if accurate). But that's not a _particular_ problem since postal filing still works.

Also, the paid tax preparation software options still aren't too expensive -- $20 or less for TaxAct, as one example. Sometimes they're free through partners such as U.S. brokers, and sometimes you can find discounts and promotion codes. So keep an eye out for such offers.


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## Bevdeforges

Ah, dang - you knew it was too good a deal to last!

Just checked the IRS FreeFile information and the program (and online information) doesn't open until 15 January - so a few more days yet.

I confirmed that both TaxAct and TaxSlayer (the traditional mainstays for those of us overseas) are only offering free services for those filing 1040EZ or 1040A - which leaves out the expat crowd. (Though they may have different options if they are still part of the FreeFile program this year.) Even the Free File Fillable forms site still only has the information for last year's forms.

So, once the FreeFile information is available, I'll post something to see what is or isn't available for us this year. (Or perhaps the IRS will address this somewhere on their website - stay tuned.)
Cheers,
Bev


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## Alltimegreat1

Will the paid versions of TaxAct and TaxSlayer support expats and FTC, etc.? $20 or $30 is not much if the software addresses all these issues.

I'm still a bit confused as to why filing as head of household would be better than married filing jointly. Is it just because obtaining an ITIN is a hassle?

Since my wife has no income, I would have thought married filing jointly would earn us the most credits.

We don't plan on moving away from Germany, and if we did it would be to the US. So I would feel comfortable switching to the FTC for the sake of getting the $1,000/year child tax credit.


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## Bevdeforges

Up to you if you want to use the paid versions this year. (But make sure you get the version that includes the forms you need. They seem to have several different options now.) Plus, if you're looking to get money back, the price of the software is part of the deal.

Many folks object to having to "register" their NRA (non-resident alien, nothing to do with guns) spouse with the IRS for a variety of reasons. And, in the future, if she does have income of any sort (interest from a bank account, or inherits a few shares of stock or a life insurance account from her family, etc.) then all that will have to be reported in future if you want to continue filing jointly. 

Plus, if you only have limited income, where the taxes you pay in Germany are more than adequate to eliminate your US taxes, those "extra" allowances and deductions from filing jointly don't actually come into play. Take a look and see if you really have deductions (even if you file jointly) in excess of what you're allowed as head of household for the standard deduction. The standard deduction for head of household for 2015 is $9,250 vs. $12,600 for those filing joint. However, if you don't have at least $9,250 in itemizable deductions, you don't really benefit by filing joint.

And don't forget that you can only take the FTC for INCOME taxes - you don't get to use Church Tax or any of a number of other taxes not considered by the IRS to be "income taxes." 
Cheers,
Bev


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## Alltimegreat1

I recall seeing on this forum a while back that the solidarity surcharge (Solidaritätszuschlag) does count as income tax as far as the FTC is concerned.


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## BBCWatcher

Yes, that is the IRS's interpretation from what I can find.

Note that the FTC doesn't _quite_ require that the creditable tax be an "income tax." I would refer you to the instructions for details.


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## Alltimegreat1

This is the respose I just got back from Taxslayer. Seems like they're not really set up to handle the FTC.

"I would be more than happy to assist you today regarding the Foreign Tax Credit. At this time, TaxSlayer supports only the short form 1116. If you choose to use TaxSlayer.com, reporting Form 2555 (Foreign Earned Income Exclusion) would be more beneficial."


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## Bevdeforges

There is going to be a certain amount of confusion this year over taxes for overseas residents. I agree that this year's instructions seem to change the determination of what taxes are or are not considered "income taxes" for purposes of the FTC. In the past it has always been the case that the French CRS/CRDS (a sort of surcharge benefiting the health care program) is most definitely NOT creditable. However, the way the instructions are worded, I would say it certainly isn't excluded. What changed? (Maybe they're just not looking for stuff like this anymore.)

I would wait until after Friday, when the Free File participants are posted on the IRS website to see what the options are going to be for this year, because things most definitely have changed.
Cheers,
Bev


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## manny.j

Thank you Bev et al. for information on filing taxes.

Unless I missed later posts on topic of filing software for US citizens living overseas, I noticed that there was no updates since 13th January 2016.

So, could anyone please confirm if TaxAct or any other filing software is suitable for US citizens overseas?

Many thanks


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## manny.j

Duh!  Looks like I did miss Bev's pinned post at the top of this forum! However, appears things are quiet as going through IRS site, there really are no options available beside Free File. 

Last year I used Taxact (IMHO not very user-friendly but worked!)- but Googling for last 30 minutes or so, I was unable to find any free options for oversea residents. Perhaps things will speed up in February with options available for filing, in the meantime I will try Free File.


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## Bevdeforges

Definitely the terms and conditions for the various Free File options have changed. I did manage to find a statement on the IRS website this year that claims that having a foreign address will NOT eliminate your option to file electronically. However, you have to check the individual Free File offers carefully, even if you use the little wizard thing on the IRS site to determine which Free File offers you "may be" eligible for.

When I tried the wizard thing, I got two possibilities, but on further investigation one of the two does NOT include the forms 2555 or 2555-EZ. That doesn't affect me this year, but obviously would be kind of basic for many others here on the forum. (And in the wizard, they don't ask any question that would screen for needing or not the 2555 form.) In my case, I think it was my age that knocked me out of the running for most of the Free File offers.

If you're willing to pay for your software, then probably any of the major name softwares would work just fine, as long as they have fixed the "foreign address" problem from prior years and you check to make sure they include the key forms you need. Though I'm hoping to try out the IRS FreeFile Fillable forms this year. (It worries me a bit that they show this option "if your AGI is greater than $62,000" - though I don't think there's a minimum AGI for those forms.)
Cheers,
Bev


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## mehemlynn

I've recently tried to file on both TurboTax and TaxSlayer, both require a US billing address to pay for the software (a bit of a challenge for those of us who have been away a long time). Has anyone found a good way around the address issues? It is possible to get the whole way through filling in the forms with a foreign address, but can't pay the fee and file.

I did think about trying to use a virtual credit card with a US billing address, but that will be expensive and possibly not allowed.

I'm trying to get it in soon, because my withholdings in the US are needed to pay my UK taxes.

M


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## Bevdeforges

Unfortunately, the rules have really changed this year. Last year, a friend of mine managed to file her back years using TaxAct and paid with her French credit card - but for the current year she was using the FreeFile service. 

If you're over the Free File limits (income or age-wise), you could take a look at the IRS Fillable Forms, though those give you little or no guidance other than just doing the math for you in key spots.

When I used the Free File Wizard the only one that came up that included the 2555 forms was 1040Now.net Have not heard of them before, but they do seem to have a full array of forms, and filing a Federal form is only $20 if you're not Free Filing eligible. But on a quick scan of their site, I can't see if there would be any problem taking non-US credit cards.
Cheers,
Bev


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## BBCWatcher

What about H&R Block's Free Edition?


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## Bevdeforges

The Free File edition of H&R Block software is only valid for those between the ages of 17 and 50. But it does seem that they have a regular free version that seems to include the relevant forms and has no age restrictions. (Check the forms listing for yourself if you have specific needs.) If and when someone uses that successfully from overseas, give us a shout.
Cheers,
Bev


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## BBCWatcher

Bevdeforges said:


> But it does seem that they have a regular free version that seems to include the relevant forms and has no age restrictions.


Yes, that's the link I provided.


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## Bevdeforges

One small caveat on the H&R Block online service --- it may be insignificant, but I just want to avoid anyone running into problems....

Evidently Block has an H&R Block Expat service set up online. Hadn't seen this before, though I admit I never went looking for it, either. It's a separate tax preparation service, focused on expats, but it offers considerable personalized consultation (online or in person if there's a Block office in your area).

It takes a little bit of digging around to find the prices, but apparently a "basic" expat form goes for $200 - 400 (which strikes me as expensive for a simple tax form, even from abroad - but I admit to being really cheap in these matters). OTOH, if you want someone to hold your hand while filing (particularly for the first time from overseas) it may be well worth what it costs to you.

Just for your information, I did find this review of the most popular tax preparation software products: The Best Online Tax Preparation Software for 2016 | PCMag.com
They are talking about the paid versions of the software, and they don't evaluate some of the features most important to us expats, but it may give you some ideas about which services might work for you. 
Cheers,
Bev


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## Phuster

I ended up having no trouble filing for free with TaxAct. It's certainly not intuitive, but it got the job done. I only filed a 1040, FTC (1116), and health covered exemption (8965). I do very much love TurboTax, but I couldn't justify spending 35usd on it, given how simple my filing is.


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## manny.j

*Feedback on Free File Fillable*

Friends,

Here is my feedback on freefilefillableforms which I understand has been recommended on IRS website for filing tax-return for Expats.

*PROS*
1. Very easy to use. In fact, this is the most user-friendly tax-return online filer we have used in the last 3 years. We used Tax-Act in previous year, which we found fairly complex to use with too much unnecessary questions.

2. The format of adding forms is extremelly helpful. Key requirement however is that person filing MUST know what they are doing i.e. if one's tax-filing situation has not changed since last year's filing and you have a copy of last-year's submission, then completing current year tax year return becomes very easy.

*CONS*
1. If your situation has changed since last year, then you may find this a little tricky to use because its not for beginners. 

2. A major bug we found was during submission of our taxes where our filing was rejected because we did not complete the "Foreign Post Code" section in our 1040 form. Why did we not do so? Because the Foreign post code section in this software can currently only accept 5 digits and UK post-code is also made of alphabets with 6 characters in total. So to resolve this issue, we simply entered 00000 as we had no other choice. Once we did this- we were able to successfully file the taxes.


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## manny.j

*freefilefillableforms Bugs*

Had another bug using freefilefillableforms  where if someone is completing Section II of Form 1116- The following error is received:

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Issue : Business Rule F1116-011-01 - If for any country in Form 1116, Part II, column (m) 'ForeignTaxWithheldOnIntAmt' has a non-zero value, then [ForeignTaxWithheldOnInterestStatement] must be attached to column (m).

Issue : Business Rule F1116-003 - If for any country in Form 1116, Part II, column  'OtherCurrencyTaxPaidAmt' has a non-zero value, then [OtherCurrencyTaxPaidStatement] must be attached to column .
------------------------------------------------------------

Checking IRS website for this error (Business Rule F1116-011-01) and from this PDF file on IRS, it stated
"At this time, Free File Fillable Forms does not support statement attachments. You will need to find software that does support the attachment or print your return and mail it."

Outcome- From my experience, unfortunately this software is currently not practical especially if one needs to state the earned income tax withheld in foreign currency.

Did anyone else have the same experience or could be kind enough to share whether there is a solution? 

My feeling is there is no reliable, bug-free Free software for filing taxes.

Are there any PAID ones from someone's experience is reliable one to consider then please share your thoughts...


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## Bevdeforges

I saw that comment about the 1116 form on the IRS site and wondered how much trouble that would give folks. Then again, printing off the forms and sending them in with the attachments is probably the simplest and quickest solution.

I had TaxAct verify my returns one time and they found everything just fine. Submitted them electronically to the IRS and they wouldn't take them for a little thing - something TaxAct had specifically validated. So I just printed off what I had and mailed them in. OK, it costs a bit of postage, but the IRS didn't seem to have a problem with them. Just be aware that some tax programs will ONLY let you e-file and will not allow you to print off your returns - or will only let you print them if you pay a fee to do so.
Cheers,
Bev


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## manny.j

Thanks Bev  I guess if the bugs from OLT is not resolved...we may just end up taking the hard copy of our tax forms to the US and post it there (we are off to the US on a holiday so works out perfectly...) although I am hoping to e-file the forms as it gives me a sense of comfort of receiving acknowledgement from the IRS after submission.


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## chuck846

Funny how we are all different. We have filed every one of the 30+ returns over the course of our marriage (I can't remember how many  ) hard-copy. I send it registered mail via the post office (either the US or Mexico). I keep the receipt and wait to see either our check clear the US bank or their deposit to our account. It has never taken very long.


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## byline

I am currently mangling my way through the H&R Block site, but it is not generating any of the forms I see from last year. I have no idea what I am doing wrong. Ugh!


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## chuck846

byline said:


> I am currently mangling my way through the H&R Block site, but it is not generating any of the forms I see from last year. I have no idea what I am doing wrong. Ugh!


So one of my activities this morning was to open up my TurboTax generated 2014 tax return on one screen and my 2015 on another. There are many dis-similarities. I started stepping down the 'forms' list creating a list of differences. That list is up-stairs at the moment but one of the most odd differences was that you are now supposed to provide your driver's license info ?


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## byline

I couldn't even get it to generate the basic Form 1040. It was asking me to enter income ... but with no spaces provided with which to enter it. Weird. Maybe I'm just tired, and should try again another day. *sigh*


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## chuck846

byline said:


> I couldn't even get it to generate the basic Form 1040. It was asking me to enter income ... but with no spaces provided with which to enter it. Weird. Maybe I'm just tired, and should try again another day. *sigh*


What program ? I would uninstall and re-install.


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## byline

chuck846 said:


> What program ? I would uninstall and re-install.


The online H&R Block site. I'm trying OLT.com, but will continue when I'm not so tired.


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## Bevdeforges

Just a couple thoughts:

On the tax programs I have used, they normally won't let you enter things like salary income directly onto the form. They normally insist that you copy the information from your W-2 onto a sort of ersatz W-2 form. Only issue is that, for those of us living overseas, we don't have a W-2 form. Used to be you just got creative and filled something in, but then they came up with a separate form for reporting foreign salary and wages. However, I don't find that this year, at least not on the programs I've glanced at so far.

When all else fails, try Publication 54 and filling things out by hand, following the instructions. 
Cheers,
Bev


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## calamar

Bevdeforges said:


> Evidently Block has an H&R Block Expat service set up online. Hadn't seen this before, though I admit I never went looking for it, either. It's a separate tax preparation service, focused on expats, but it offers considerable personalized consultation (online or in person if there's a Block office in your area).
> 
> It takes a little bit of digging around to find the prices, but apparently a "basic" expat form goes for $200 - 400 (which strikes me as expensive for a simple tax form, even from abroad - but I admit to being really cheap in these matters). OTOH, if you want someone to hold your hand while filing (particularly for the first time from overseas) it may be well worth what it costs to you.


thanks for the tip Bev. The fee does not strike me as expensive for a first time filer who values a lot his scarce free time. 

I will give it a try and keep you posted.


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## calamar

I had an initial call with H&R block. Their fee is 500 USD for the tax preparation and FBAR and all that good stuff. However they want an additional 1500 USD to file the previous 3 years of taxes and forms 8389s and Fbars. 

I think I will have them do just the current year taxes and I will use that as a model for previous years. 

Their pricing model is all wrong, each subsequent return should be cheaper as it requires less effort. If they had priced them at a reasonable amount I would use them for my previous returns.

I will keep you posted on my experience.


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