I am trying to file a return with only foreign income and claim the foreign income exclusion and am getting reference code #499. Does anyone know how to resolve this issue? I would greatly appreciate it since I have been on hold for over an hour waiting for Lacerte rep to answer....
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So adding in $1 to interest income worked, thank you! My other issue with this one is that it takes the return to zero and in the past due to the UK and US having a treaty, this client was able to get additional child tax credits and this time it is not giving a dime and just want to make sure I am not missing any entries. From what I understand, because the foreign income exclusion has been taken in the past, I cannot take the foreign tax credit in following years. Do you have knowledge on these pieces?
I appreciate you taking the time to reply to my original post, this one has me stumped for sure!
@kristinacoley What you stated is not correct. CTC has nothing to do with the US-UK DTA; on what basis do you believe that your client should be allowed the credit based on the treaty?
Are you sure claiming FEIE would produce the optimal result, if your client is in the UK, given the effective tax rate there would generally be higher?
In any case, Lacerte/PTO are NOT capable of handling FTC when FEIE is claimed by taxpayers in fiscal year countries like the UK. Overrides with offline computations will need to be made and statements prepared offline will need to be attached to the return to supplement the stock statement which awkwardly shows the override for scaledown ratio.
Lacerte/PTO will also be wrong if FEIE involves income that should be sourced to multiple prior or future years (such as stock options or various types of bonuses). This is due to the lack of a proper coding option - the system permits only coding to prior/future years and does not differentiate whether only a portion should be sourced to the year immediately prior or after.
Intuit has been made aware of these technically incorrect issues for years but does not see these as a priority even though returns prepared by unaware preparers, relying on the built-in tax logic in these professional tax products, will be incorrect and will create unnecessary exposures to both the preparers and the clients they serve.
@IntuitBoris Hi, Boris, could you please escalate this again and give us an update? Thanks!
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For someone based in the UK, that's what we would normally expect. Hence, the question to you.
Nevertheless, you shouldn't simply forgo the FEIE in favor of FTC without first considering the implications and whether it is really more beneficial to your client if FEIE had been claimed in previous years because that would be considered a revocation of the election.
What happened to the CTC/ACTC you thought your client should be able to claim based on the US-UK DTA?
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When I prepared the return as I have always done in the past with Lacerte, the return came up as him owing almost $2,000 which is incorrect and I cannot figure out why. Also, with the foreign income exclusion, Lisa Ihm said they would not be qualified for the CTC and ACTC's so obviously that was an error in the past. I have spent hours going over both Credit vs. Exclusion and have more gray hair now than ever before! LOL...
PTO runs on the same Lacerte engine and shares the structure of most input screens. Something must have triggered the incorrect treatment in the past as I have never seen that with the expat returns we prepare.
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