Foreign housing deduction for self employed

[ktmcpa]

Mortgage interest and real estate property deduction

For a US citizen owns a house abroad.

Trying to take the housing deduction not exclusion. 

How to deduct. I am new to Proseries. Like it. 

Please help

[itonewbie]

Foreign mortgage interest is to be taken on Sch A.  But you have more to consider than §911.

[ktmcpa]

Appreciate your response. 

I understand it should be on Sch A. Total housing expense is $31k. 

I will have to reduce this amount due to exclusion of foreign income. 

1/3 would be non excluded income, therefore itemized deductions would be 1/3 of $31k.

I would rather take standard deduction. 

Am I taking the right approach ? 

I appreciate your help.

[itonewbie]

Your understanding is not correct.  There's no foreign housing deduction for your client and the foreign mortgage interest should not be subject to reduction.

[Taxing]

So no housing deduction for Sch C income, but itemize deduction can be taken on Sch A without reduction of the excluded foreign income. All of $31k can be taken as itemized deduction. Is that correct ?

The software took the QBI deduction. A foreign business is not allowed to take the QBI.

How do I stop the QBI deduction within the software ?

You are a very knowledgeable person and an asset to this community. 

[itonewbie]

Thanks for the kind words, @Taxing!

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So no housing deduction for Sch C income, but itemize deduction can be taken on Sch A without reduction of the excluded foreign income. All of $31k can be taken as itemized deduction. Is that correct ?

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In this case, based on the info presented, that would be correct in relation to foreign mortgage interest.  Deduction for foreign real property taxes, however, has been suspended under TCJA.

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The software took the QBI deduction. A foreign business is not allowed to take the QBI.

How do I stop the QBI deduction within the software ?

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That's because PTO doesn't know whether the business has any US-ECI.  You will need to toggle that on the Qual. Bus. Inc. Dedu. tab by entering 2 on the line for Business is a qualified trade or business: 1=yes, 2=no [Override].

[Taxing]

From the treaty I read, it seems that SS from these 2 countries are taxed in their respective countries and therefore not taxed in U.S. Totalization Agreement. 

My client also has pension income of $28k from France and 10% tax was withheld. 

This can be reported on U.S. Income Tax return, but what line should I use ? 

And take the tax credit available.

Is there any one I can call at Proseries ? 

You are very helpful. Can I send you the return when I finish and you can give me your opinion from your experience. 

[itonewbie]

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@Taxing wrote:

From the treaty I read, it seems that SS from these 2 countries are taxed in their respective countries and therefore not taxed in U.S. Totalization Agreement. 

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Your statement, particularly about SS not being taxed in U.S. Totalization Agreement, is confusing.  Totalization agreement governs how social security contributions are made and how benefit entitlements are determined, not how social security benefits are taxed.  The application also determines whether social security taxes may in whole or in part be creditable for FTC.

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My client also has pension income of $28k from France and 10% tax was withheld. 

This can be reported on U.S. Income Tax return, but what line should I use ?

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There are more questions that need to be raised: https://proconnect.intuit.com/community/proseries-discussions/discussion/where-are-foreign-pension-i...

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Is there any one I can call at Proseries ?

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If I were you, I'd find myself a four-leaf clover before calling, especially if you are looking for tax technical support.

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Can I send you the return when I finish and you can give me your opinion from your experience.

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We specialize in international returns but do not review international returns prepared by others even if a fee is paid due to the potential complexity of these returns as well as the amount of time and risks involved.

When it comes to foreign "Sch C" businesses, I am always skeptical whether the correct classification is identified.  See this thread for reference: https://proconnect.intuit.com/community/proseries-discussions/discussion/i-have-a-self-employed-clie...

[qbteachmt]

@Taxing 

"Can I send you the return when I finish and you can give me your opinion from your experience."

Never Do This!

You are posting on a Public Internet forum of peer users. This is Not a secure site, nor Intuit Support. You might as well photocopy your client's return and post it at the laundromat.