# FEIE for 2020 - Dual citizenship - help much appreciated :)



## melkien (May 12, 2021)

Hi everyone,

I live in Argentina and have lived here my whole life. I also have US citizenship (so dual citizen).

I have filed my taxes via TaxAct for the last couple of years, since I earned less than the standard deduction because of Argentina's current tough economic situation. However, that made it easy to file taxes, because I just had to file a federal 1040 and capital gains and losses, which I generally have had losses for the past couple of years, which I have carried over from year to year.

I have recently switched jobs to an Israel based company and given a better pay, will now have to file a FEIE form. I do know that consulting a CPA might be better, but I would still really value anyone's helpful input on these questions. My reluctance to currently consult a CPA is of course cost (especially because for 2020 my earnings were not too much over standard deduction, and I had my capital loss carryover), my case being a very clear FEIE candidate, TaxAct audit protection, as well as really liking TaxAct and would like to maintain as much filing history as I can there, as carryover is automatic and I really enjoy it.

Moreover, I am still not too sure how much more time expats have to file, since I read its June 15th and not May 17th like US residents, but I am not used to understaning how the IRS would recognize I am an expat, as in if I would have to file a specific form or would they simply deduce that from country of residence, which I believe would make the most sense.

I would really appreciate any info on these questions. I apologise if they are a bit exact, I am not too sure how strict the IRS is even with a very clear situation like mine, and would like to avoid audit issues as much as possible:

Given that I lived in Argentina my whole life, would bona fide dates be Date of Birth - Blank Date (meaning leaving that space empty in 2555)?


Am I correct in assuming my foreign tax home would be my current Argentina address or do I have to just input state and country? And would date established my date of birth or date in 2020 when I moved to my current rented apartment?


Principal country of employment would be Argentina, I believe, even if I work for an Israel company.


My brother filed his 2020 taxes and previous streamline process using my current address as his tax residence address, given that he was leaving Argentina to live in the US and wanted to make sure any papers get here correctly, and that I could later send them over to him. Does this mean when I am asked in FEIE if I lived with someone else, and we will both file with the same address, do I have to actually say YES and mention my brother? We never lived together, he just input that address for the mentioned reason.


I am paid directly to a US account by the Israel based company, so apart from entering the foreign address, do I have to input its US headquarter address? It only has one office in the US, and I am not too sure if its the exact same company in legal terms, as the Israel based one is Ltd. and the other is Inc.


When asked about a Visa, I do not have one since I have dual citizenship. Should I literally write "Dual Citizenship" in the Visa type field, or just "N/A"?


I keep getting told by TaxAct software that I have a rebate opportunity for COVID stimulus checks for $600. Wouldnt that not be the case given that I already received checks for $1400 and $600? Dont want the IRS feeling I am trying to get extra cash that I am not really eligible for.


The only other question not specific to form 2555 is about non equity option transactions for form 6781 in case anyone know about it. Last year I did some VIX option trading with my brother on my trading account and didnt know this had further tax filing. I had an overall loss in those positions, which if I am not mistaken would report in Part 1. On this note, is it obligatory to file losses of this type, and capital losses? I would really want to file capital losses to carryover because with TaxAct it is very straightforward to import this info, but not so much with form 6781 which if I could would want to avoid, even if that meant sacrificing carryover losses.

Thanks so much to whoever takes the time to provide very valuable info, id really appreciate it.


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## Bevdeforges (Nov 16, 2007)

OK - net-net, the "penalty" for late filing is a percentage of your taxes due, so as long as you aren't going to owe any taxes it ultimately doesn't matter when you file. Normally the filing deadline for overseas taxpayers is June 15th, but they don't seem to have said whether or not that will get pushed out the "usual" two months from the US deadline - currently May 17th. But with the backlog the IRS is trying to work off, I wouldn't worry too much about it.

On to your questions:
1. absolutely correct - you have lived in Argentina all your life
2. I would just put in "Argentina" for tax home
3. Yup - you are working wherever you are while doing the work
4. No, don't bother including your brother - he was only using your address as a mail drop, not residing there
5. No, you aren't working for the US company. I'd leave it blank or even fill in n/a. 
6. I'd put in "Argentinian citizen" and leave it at that.
7. If you've already received the checks, just leave that stuff blank
8. The IRS has little or no way to track foreign transactions like this. I would just ignore it - but perhaps someone here on the forum has more information about how to handle something like this.


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## melkien (May 12, 2021)

Hi Bev, thanks so much for taking the time! I really appreciate it.

Just so as to be informed for the future, mostly based on reading that expats and FEIE filers have a higher audit chance: do you happen to know how accessible the IRS tends to be regarding audits. Meaning, I believe my case is very clear and I'm not really hiding anything, apart from having filed on time the past couple of years. But if at first they somehow do not understand my situation and decide to audit, is there a person behind it to which one can explain the situation? I am not really hiding anything, I just feel some warning signs for next year when I'll be filing a higher income and FEIE will be my main explanation so as to count with the big deduction, so I wouldn't want them to misinterpret it and later want to get charge me a big amount.


On another note, based on your answers, just wanted to further ask a few things:

2. Since I would just input my tax home as 'Argentina', date established would just be Date of Birth - Ongoing, right? I mean instead of my current rented apartment start date.

7. Its not too clear to me: are there only two stimulus checks and maybe I am getting rebate for a third? I am not too sure why TaxAct would mention I am entitled to another $600, I don't think you guys might know either, just mentioning in case someone does. I will have to call TaxAct since I asked via email and they didn't know.

8. Just to clarify, these are actually US based nonequity option investments in a US TD Ameritrade account, so I believe the IRS was informed via the 1099B form. Based on that I was wondering if anyone knows if it is mandatory to report those losses, or if only gains.


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## Bevdeforges (Nov 16, 2007)

OK, your first question is pretty easy - while theoretically filing with the FEIE raises your chances of being audited, practically speaking your chances of being audited when filing from overseas with earned income within the FEIE limits are slim to non-existent. There are a number of reasons for this - but it boils down to the fact that the IRS is hopelessly understaffed and underfunded (not to mentioned overworked, with the responsibility for the economic impact payments dumped on them right at tax filing time two years in a row now). Even in "normal" times, the agents are expected to maintain a certain level of "return" on the filings that they audit (i.e. a minimum average of additional tax found as the result of the audits). So if you're filing "good faith" returns that don't obviously look like you could be hiding something, you can generally sleep soundly at night.

As to your other questions:
2. Yup - you established your residence at your date of birth and your residence is "ongoing."

7. There have been 3 EIPs (official name for the "stimulus checks") so far. First one was in early 2020 for $1200, then the $600 one in January 2021, followed by the most recent one for $1400 which is still in process of being sent out. Generally they send you a letter about a month or two afterwards saying that they have direct deposited the amount - or that you should have received the check by now. But so far, no one I know among the overseas group who was paid by check has received either the check or the letter yet. (Then again, the overseas folks I know who have gotten the first two checks are US Social Security recipients - and they are generally the last ones paid.)

8. If there was a 1099B issued on the transaction, you should definitely include it in your return. If that other form is required, it's unlikely that Tax Act will include that in its package. If you will be printing off and then mailing in your return, you can probably get a copy of the form in pdf format from the IRS website to fill in. (Also the instructions for the form.) I don't have any experience with those "exotic" forms so can't advise you any further than that. (But it may say something about that in the form instructions.) About Form 6781, Gains and Losses From Section 1256 Contracts and Straddles | Internal Revenue Service


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## melkien (May 12, 2021)

Hi Bev, thanks again so much for your input.

Im trying to work out the final details of my return and was wondering if you could clear something up: I have both short term and long term capital losses carried over from previous years, do I have to forcefully use 3000 of this capital losses even if my taxable income after Form 2555 is 0? Or can I just keep carrying over that loss until it actually makes a mathematical difference.

I am not sure, mainly because the first year I declared capital losses taxact forced me to use 3000 that same year, even if the standard deduction was enough, and in later years Taxact automatically carried over without spending any dime out of the carried over value, which seems contadictory and makes me think the software might've made a mistake that first year.


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## melkien (May 12, 2021)

On that note (cant edit previous post anymore), I also noticed something in my TaxAct return, along the 1040 it includes the FEIE exclusion amount, the standard $12.400 deduction, and $(3000) at line 7 for capital loss, but the 3000 loss would not be needed this year with FEIE + standard deduction being enough. Would writing (3000) on line 7 actually "use up" that amount of capital loss carryover? TaxAct seems to both write it on line 7 but actually also carry it over for next year, without using up any accrued capital loss.

Thanks!


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## Bevdeforges (Nov 16, 2007)

I am really not the person to ask about capital gains and carry-forwards and such. Let's see if we can flag down someone else to help with this.


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## 255 (Sep 8, 2018)

melkien -- It appears TaxAct is handling your loss correctly. The loss of $3,000 should show up on IRS form 1040 and it should also be available to carry forward to the next year, if it didn't affect your current year's taxes. So bottom line, no, you shouldn't "use up" your carry forward losses and , yes, you need to include it -- so you can carry it forward for another year. Be advised that you could be in a position to carry the loss forward indefinitely. The obvious solution would be to learn to trade/invest more successfully (maybe practicing in sim. first) and you'll be able to offset your new gains with your past losses. An article, that might explain it a little clearer than the IRS pamphlets/instructions: Capital Loss with Little or No Income - Fairmark.com .

As far as the stimulus payments, the first two, that Bev mentioned ($1,200 & $600,) apply to 2020 -- the last one ($1,400) will apply to 2021. If you only got the second one ($600) and the last one ($1,400,) you missed the first one of $1,200. TaxAct should show a credit of $1,200, that you should be receiving as a refund (credit on line 30 of your 1040.) You can manually complete the "Recovery Rebate Credit Worksheet" on page 58 or 59 (depends on version) of the Tax Year 2020 1040 and 1040-SR instructions to troubleshoot your error: 2020 Instruction 1040 (irs.gov) . Cheers, 255


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## melkien (May 12, 2021)

Hi 255,

Thanks so much for that! It was very useful and exactly what I wanted to understand.


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