Does anyone know how the IRS treats foreign tax credit carrybacks from passive category income? I have excess credits from foreign dividends and I'm not sure if there are special rules when carrying these back.

I went through this exact same headache last year! After reading through all these responses, I want to add one more tip that really helped me. When you're preparing your Foreign Tax Credit Carryback Statement, make sure to clearly label which tax year each number comes from. The IRS agent I spoke with mentioned they see a lot of confusion where people mix up the years in their calculations. Also, if you have multiple types of foreign income (like both passive dividends and active business income), you'll need separate carryback calculations for each category since they can't be mixed. I learned this the hard way when my first submission got rejected. The template @Natasha Volkov shared is spot on - I used something very similar and it was accepted without any issues. Just remember to keep copies of everything because if the IRS has questions later, you'll want to be able to show your work.

The IRS be like 'we'll call you back in 2-4 business YEARS' 😭

tbh ur better off faxing them. at least u know someone has to physically touch the paper eventually lol

Make sure you're not confusing margin interest with your line of credit interest! They're treated differently. Margin interest from a brokerage account is investment interest, but your line of credit interest is only deductible as investment interest if you can directly trace the funds to investment purposes.

One thing I'd add that hasn't been mentioned yet - if you're using the line of credit for rental property down payments, be careful about when you start deducting that interest. The IRS generally requires that rental property be "in service" (actively generating rental income or available for rent) before you can deduct related expenses on Schedule E. So if you use part of your credit line for a down payment in January but don't get the property ready for tenants until June, you might need to capitalize that interest as part of the property's basis rather than deduct it immediately. Once the property is in service, then future interest payments related to that portion become deductible rental expenses. This timing issue caught me off guard on my first rental property purchase. I'd recommend consulting with a tax professional if you have multiple properties at different stages, as the rules can get complex when you're juggling acquisition costs, improvements, and ongoing expenses.

Hey, I actually went through this exact situation with HMNY (MoviePass) back in 2019! The key is that you need to identify the exact date the securities became worthless, not just when they were delisted. For HMNY specifically, they filed for bankruptcy in January 2020, and the courts determined the shares were officially worthless at that point. I was able to claim my full loss ($4,600 down the drain, ugh) on my 2020 taxes. Your broker should provide a "worthless securities" confirmation, but if they don't, you can use public bankruptcy filings or SEC documents as proof.

Don't forget that worthless securities are still subject to the capital loss limitations. You can only offset up to $3,000 of ordinary income per year after you've used the losses to offset any capital gains. Had to learn this the hard way when I tried to claim $12,000 in losses from some penny stocks that went to zero in 2022. I offset about $2,500 in gains from other stocks, then could only use $3,000 against my regular income. The remaining $6,500 had to be carried forward to future tax years.

does anyone know if there's a statue of limitations on these CP2000 things? i got one for my 2021 taxes but it just arrived last month. feels kinda ridiculous they can come after u years later when i dont even have those documents anymore

@Aisha Ali, I went through almost the exact same situation when I was doing my master's here! The housing scholarship tax issue catches so many international students off guard because it really isn't intuitive coming from other countries where scholarships are completely tax-free. A few things that helped me when I got my CP2000: 1. Don't panic about the 30-day deadline - if you need more time, you can call and request an extension, especially as an international student still learning the system. 2. The IRS calculation might not account for any applicable tax treaty benefits. Depending on your home country, you might qualify for reduced tax rates or exemptions under the tax treaty. 3. When you respond, include a brief letter explaining that you're an international student new to US tax laws and made an honest mistake. This can help with penalty abatement. 4. Check if your university's international student services office has any tax clinics or partnerships with local tax preparers - many do, especially around tax season and for situations like this. The good news is that this is super common and the IRS deals with it all the time. As long as you respond promptly and pay what you legitimately owe, it shouldn't be a big deal. You've got this!