I was struggling with the exact same issue last month! My foreign tax was around $720 across multiple brokerages. I ended up taking the credit and using Form 1116. It was definitely more work but saved me about $180 compared to taking the deduction. One thing to note - you can carryover unused foreign tax credits to future years (up to 10 years), but you can't do that with deductions. So even if the credit calculation is a little more complex, it usually pays off in the long run.

Yes, you can absolutely carry over unused foreign tax credits! This is one of the biggest advantages of taking the credit over the deduction. If your foreign tax credit exceeds your U.S. tax liability on foreign income in any given year, you can carry the unused portion forward for up to 10 years. TurboTax does track this automatically if you use the same account and import your prior year return. It will show any carryover amounts when you get to the Form 1116 section. However, if you switch tax software or preparers, make sure to manually enter any carryover amounts from your previous year's Form 1116. This carryover feature is especially valuable for people with fluctuating foreign income or those who have years with lower U.S. tax liability. I've seen cases where someone couldn't use their full foreign tax credit one year but was able to apply the carryover in subsequent years when their tax situation changed. Just another reason why the credit is almost always better than the deduction for investment accounts!

mine finally showed up after 3 weeks. just keep checking

Had the exact same issue! Filed through Jackson Hewitt in early January and WMR was showing "not found" for almost 3 weeks. Turns out JH had a small error in how they transmitted my SSN to the IRS. Called JH directly (not the IRS) and they were able to check their system and confirm the return was accepted but there was a processing delay on the IRS side. My refund finally hit my account yesterday even though WMR never updated. Don't panic - just give it a bit more time!

Quick question - I'm in a similar situation but I'll be renting my house for 3 years while I'm working abroad. Do the same deduction rules apply for longer rental periods? Anyone know if there are different considerations for longer-term rentals?

One thing I'd add that hasn't been mentioned - make sure you're keeping detailed records of everything! The IRS loves documentation for rental properties. I learned this the hard way during an audit a few years back. Create separate folders (physical or digital) for each type of expense: repairs, maintenance, insurance, property management, etc. Take photos of any work done on the property with timestamps. Keep all receipts, even small ones like supplies from Home Depot. Also, since you're planning to move back in March 2025, start a calendar now marking the exact dates the property was available for rent vs. when you lived there. This becomes crucial for prorating expenses and will save you headaches later when preparing your taxes. The depreciation everyone mentioned is huge - don't skip it! Even if you don't claim it, the IRS assumes you did for recapture purposes when you eventually sell. So you might as well get the tax benefit now.

One thing nobody has mentioned yet is that regardless of which state you choose, you'll need to be aware of "foreign qualification" requirements. If you're "doing business" in a state other than where your LLC is formed, you technically need to register as a foreign entity there. The definition of "doing business" varies by state, but generally includes having employees, office space, or conducting in-person services in that state. As an expat with an online business, this probably won't affect you if you truly have no physical presence in any state. But something to keep in mind if your situation changes!

Great question! I went through this exact process about 18 months ago as an expat living in Germany. After a lot of research, I ended up choosing Delaware for my LLC, even though I had no prior connection there. Here's what I learned: Delaware has excellent legal precedent for business law, reasonable fees ($90 annual franchise tax for most small LLCs), and their Court of Chancery is specifically designed for business disputes. While states like Wyoming and Nevada get a lot of attention for zero state income tax, Delaware's legal framework is incredibly well-established. The key thing is that as an expat, you'll be paying federal taxes regardless of which state you choose, and since you're using FEIE, the state income tax differences matter less than they would for a US resident. What matters more is ease of maintenance, legal protections, and banking relationships. I used a registered agent service in Delaware for about $150/year and was able to open a business account with Chase online using my EIN and passport. The whole process took about 3 weeks from start to finish. One tip: make sure you understand the difference between your LLC's state of formation and where you'll actually owe taxes. As an expat with FEIE, your federal tax situation is more complex than the state choice.

I work as a financial advisor and wanted to add that life insurance trusts (ILITs) are another powerful tool wealthy families use. Life insurance proceeds are generally income-tax free, but still count toward your taxable estate. By creating an irrevocable life insurance trust that owns the policy, the death benefit stays outside your estate. This can provide liquidity for heirs to pay estate taxes on illiquid assets (like businesses or real estate) without having to sell them quickly at potentially reduced values.

This is such a helpful thread! I'm dealing with a similar situation with my parents. One thing I'm curious about - what's the typical timeline for setting up these trusts? My dad is 78 and in good health, but I'm wondering if there are any age-related considerations or if it's "too late" to start this process. Also, are there minimum asset thresholds where trusts actually make financial sense after accounting for setup and ongoing administration costs?