Negative taxable income

Forum|Forum|1 year ago
November 13, 2024
1 reply
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Hello!

I am self-employed and because I live and work overseas (thus qualifying for the foreign earned income exclusion), I am expecting to have a negative taxable income. What are some strategies I could use to improve the situation? (i.e., move deductions to credits?)

I’ve already maxed out my business expenses to limit the SE tax. Thank you!

Ask the Experts - Biz Tax Moves - Nov 2024

Best answer by Cindy4 12

Neither the FEIE or the Standard Deduction can reduce your taxable income below zero, so there will be no carryover in this case. Thank you for clarifying!!!

Cindy4 12

It sounds like you may have a Net Operating Loss carryover available to carry forward to next year to offset some income then. If you used TurboTax this year, it should automatically carry over. If not, you can enter it in the "Other Business Situations" section. It is also possible some items may qualify to be used as a general business credit. You can read more about that here.

Hope this helps!

Cindy

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cmallow17Author

Hi Cindy!

Thanks for your message. Just to clarify, I do have an operating profit, but I’m able to exclude up to $126,500 for the foreign earned income exclusion. My profit is under that amount, so after the standard deduction, I have negative taxable income. Please let me know if that changes anything with your advice. Thank you so much!

Cindy4 12Answer

Neither the FEIE or the Standard Deduction can reduce your taxable income below zero, so there will be no carryover in this case. Thank you for clarifying!!!

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