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Old 04-07-2018, 04:48 PM
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Foreign Tax Carryback and NOL Carryforward

This is an interesting one...in 2016 I had zero taxable income due to FEIE, capital losses, and Schedule E loss. I elected to carry forward the NOL to 2017. In 2017 I am back stateside for the whole year, but had 2017 foreign income to cover foreign tax liability. I'm hitting the foreign tax credit limit because my foreign income was only the tax payment plus a couple thousand, so it's a small fraction of my overall income.

So if I carry the foreign tax credit back to 2016, this will increase the NOL, which I would then carry forward to 2017. Is that how it should work?



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Old 04-07-2018, 10:38 PM
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correct;NOLs can be carried forward for 20 years; it means that aslongas you start earning taxable income within 20 years of start-up, you won?t have to pay income tax until you have made cumulative taxable income in excess of prior net operating losses.



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Old 04-07-2018, 11:39 PM
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Originally Posted by Wnhough View Post
correct;NOLs can be carried forward for 20 years; it means that aslongas you start earning taxable income within 20 years of start-up, you won?t have to pay income tax until you have made cumulative taxable income in excess of prior net operating losses.
That's wild! So I'll file 2017, amend 2016, then amend 2017...



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Old 04-08-2018, 12:30 PM
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Originally Posted by taxplan2025 View Post
That's wild! So I'll file 2017, amend 2016, then amend 2017...
No you do not amend 2016 since as you said you had zero taxable income due to FEIE, capital losses, and Schedule E loss and elected to carry forward the NOL to 2017



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Old 04-08-2018, 05:23 PM
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Originally Posted by taxplan2025 View Post
That's wild! So I'll file 2017, amend 2016, then amend 2017...
Actually now that I look at the 1040, NOL is based off of line 41 so adding additional credit on line 48 won't actually increase the amount. Frustrating not to be able to use this tax credit for its intended purpose...have to figure out how to get more foreign income.



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Old 04-08-2018, 06:15 PM
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Originally Posted by Wnhough View Post
No you do not amend 2016 since as you said you had zero taxable income due to FEIE, capital losses, and Schedule E loss and elected to carry forward the NOL to 2017
Oh I see, as is the NOL will be used up in 17. I was thinking I would carry back the foreign tax credit to 16 and that would increase the NOL applied for 17. Now I see that the credit is below line 41 anyway, so it wouldn't serve to increase my NOL. Looks like I won't be able to use the disallowed portion of the credit unless I decide to have foreign income again in the future. Bummer.



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