Foreign earned income exclusion resulting in nol?

[EAintheVI]

I have a client that has lived overseas for several years and wanted to get up to date with his filings since he will be moving back to the US shortly.  All his earned income is from overseas, in preparing the 2555, its creating a net of loss that is rolling over to the following year.  Is that correct?  

[itonewbie]

It couldn't have.  Check your worksheet again.  That's because foreign earned income exclusion can't exceed your client's foreign earned income.

[itonewbie]

If your client never filed his US returns to claim foreign earned income exclusion, check also that he still is eligible for late election.

Depending on your client's level of income and whether there's any US source income, your client may, however, have SLL, OFL, and/or ODL for foreign tax credit purposes, which would be subject to recapture.

[EAintheVI]

Yes he has filed previous tax returns with foreign earned income exclusively.  He is currently trying to get the last 3 years prepared.  The return he brought me for reference has a NOL rolling forward. He has no us source income of any kind. 

[itonewbie]

That's straight forward enough then.  Check your worksheet.  It's most likely standard deduction that you need to add back as a non-business deduction - you're probably missing that step.

[EAintheVI]

I got it figured out, thank you.  The previous filings were a little confusing to me at first, thank you for your time.

[itonewbie]

NP, @EAintheVI.  If we answered your question, please consider identifying the post with the solution to help those who may have similar questions in the future.

Have a great weekend!