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Level 4
June 3, 2021
Question

passive loss not offsetting passive income - Expat issue

  • June 3, 2021
  • 1 reply
  • 8 views

Client has $49K in passive income and $10k in passive losses. Because the passive income is foreign and foreign tax was paid on it, I was advised to complete Form 8621 and enter the passive income in Schedule 1 - other income. The software is not showing an offset of the income with the loss. Are there other places to enter?

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1 reply

sjrcpa
Level 15
June 3, 2021

There are 2 kinds of passive income:

A trade or business in which you do not materially participate; a rental activity

Passive income for foreign tax credit purposes is investment income such as interest and dividends.

Are you mixing up the two?

The more I know the more I don’t know.