# 1116/2555...Losing my mind



## Phuster (Apr 12, 2015)

Hej

US citizen now in Sweden

First time doing my US taxes and it's from another country.

I feel out of my depth when trying to decipher the almost incomprehensible jargon that is tax law.

I briefly had a job in the US where I made 6000, then made 12000 in the last 3 months while in sweden. 

Using turbotax, I plug in my US income and some school loan interest paid and I get a nice 400 refund. After my Sweden income on the 2555 however, it drops to me owing 400 instead. Filling out the 1116 with my 4000 in tax to Sweden has no effect on my refund at that point.

My main question is do i fill out the 2555 even though I don't qualify for the 2 tests, or do I only fill out the 1116 in the case?

-Phustercluck


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## BBCWatcher (Dec 28, 2012)

You cannot take the Foreign Tax Credit (IRS Form 1116) on earned income you're excluding using the Foreign Earned Income Exclusion (IRS Form 2555 or 2555-EZ).

Since Sweden is a comparatively high income tax jurisdiction it may be very wise to skip the Foreign Earned Income Exclusion completely and to rely only on the Foreign Tax Credit. You are allowed to do that, but just make sure you understand the implications of doing so. Essentially it boils down to the fact you are not able to flip back and forth at will between taking and not taking the FEIE.

It's not surprising that if you _only_ report $6000, before you add in that $12000 (Form 2555 or not) you'll get a nice refund. At $6000 of gross income (and earned income) you'd qualify for the Earned Income Tax Credit, so you'd get some free money from the IRS. At $18000 you don't. Don't put too much stock into that outcome if that's what you're seeing.

By the way, how do you qualify for the Foreign Earned Income Exclusion? If you were only in Sweden from September 1, 2014 (let's suppose) -- the last three months of the year -- then you don't yet qualify. You will if you remain in Sweden, if you file IRS Form 4868 *now* to get an extension to file your taxes in October 15, 2015 (but not an extension to pay what's owed), and you file your 2014 tax return when you qualify -- in early September, for example. But that point may be moot if you decide not to take the FEIE.


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## Phuster (Apr 12, 2015)

I knew i didn't qualify for the FEIE, but the way you're guided through TT it seems as though you fill out the first part regardless, hence the question. I'm apprehensive to extend because my stay here is not guaranteed. Immigrating here is a nightmare when you're not from the EU and I'm in a sort of immigration limbo. I had a visa that ended in January, applied for an extension, but have heard next to nothing in regards to a response.

I'm a very anxious person, so my head is not doing well with my decision to complete them this late; not to mention it being my first time doing them. 

I feel confident now that I know I had done it correctly. I appreciate your concise and timely response.

Tack så jävla mycket!

-Phustercluck


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## BBCWatcher (Dec 28, 2012)

Yes, the FTC-only path (ignoring Form 2555 completely) sounds like the right path in the circumstances.

By the way, for the record you have about 48 hours (as I write this) to make a U.S. Roth IRA contribution for 2014 if you haven't already, if you wish. Your contribution limit is $5500. (I assume you're not even near age 50.)

As a practical matter the only way at this late hour you'd be able to do that is to call up your bank in the U.S. when they wake up and ask them to get it done. Most U.S. banks and credit unions can open a Roth IRA and fund it from your checking or savings account. Make sure they mark it as a tax year 2014 contribution, not tax year 2015. Then, once opened and funded from your bank, you can transfer the Roth IRA (and its cash) to a more interesting IRA custodian. My favorite would be Vanguard.

I'd file IRS Form 4868 if you haven't already, and if it looks like you aren't going to be able to file by April 15, to extend your filing deadline to October 15. If you think you'll owe some U.S. tax, pay what you think you'll owe now. TaxAct.com, TaxSlayer.com, and perhaps some other tax preparation software sites let you file IRS Form 4868 online free of charge, and you've got a few more hours to do that (as I write this).


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