Can I Write Off Foreign Business Expenses for My Turkey-Based Company on US Taxes?

You absolutely can report foreign business income and expenses on your US tax return. As a US citizen/resident, you're required to report your worldwide income to the IRS. For a sole proprietorship, you'd report your business on Schedule C of your Form 1040, just like you would for a US-based business. List all your legitimate business expenses - startup costs, operational expenses, etc. Keep in mind that you'll need to convert all amounts to US dollars using the appropriate exchange rates. You should also look into filing an FBAR (Foreign Bank Account Report) if you have any foreign bank accounts with a combined value over $10,000 at any point during the year. Additionally, you might need to file Form 8938 (Statement of Foreign Financial Assets) depending on your situation. One important note: just because you're reporting these expenses on your US taxes doesn't mean you're exempt from Turkish tax obligations. You'll likely need to file taxes in Turkey too, but you may be able to claim Foreign Tax Credits on your US return to avoid double taxation.

I was in almost the EXACT same situation last year with my business in Mexico! After spending hours trying to figure it out myself and getting nowhere, I finally found this service called taxr.ai (https://taxr.ai) that completely saved me. They have this special feature that analyzes international business documents and helps identify which foreign expenses qualify for US tax deductions. I uploaded my Mexican business docs and receipts, and their system extracted all the relevant info and categorized everything properly for my Schedule C. It even flagged which expenses might be questionable under IRS rules for foreign businesses. Honestly it saved me so much time and probably thousands in deductions I would've missed.

Just wanted to follow up about that taxr.ai site... I ended up trying it after all and wow, I'm actually impressed! I uploaded all my foreign business docs and it analyzed everything including some contracts in another language. It correctly identified which expenses qualified for US deductions and even flagged some that I hadn't realized were partially deductible. The currency conversion feature is incredibly helpful - it pulled the exact historical exchange rates for each transaction date. When I showed the report to my accountant, she said it saved her at least 3-4 hours of work (which saved me money on her fees too). They also helped me understand which forms I needed to file beyond just Schedule C. Definitely worth checking out if you're dealing with foreign business expenses.

If you're having trouble reaching the IRS to clarify foreign business questions (which I definitely was), try Claimyr (https://claimyr.com). They got me through to an actual IRS agent in about 20 minutes when I'd been trying for days on my own. You can see how it works here: https://youtu.be/_kiP6q8DX5c I had specific questions about reporting my foreign business expenses that weren't clearly addressed in any IRS publications, and I needed official guidance. After Claimyr got me through, the IRS agent walked me through exactly how to report my situation and confirmed which forms I needed. Saved me so much stress about potentially doing it wrong.

Ok I need to eat my words about Claimyr. After posting that skeptical comment, I decided to try it anyway because I was desperate to ask about my foreign contractor status. Not only did it work, but I got through to an IRS agent who actually specialized in international tax issues! The agent clarified exactly how I should be handling my foreign business expenses and confirmed I was eligible for the Foreign Earned Income Exclusion which I wasn't even aware of. This literally saved me thousands of dollars. The system really does work - they called me back in about 15 minutes and connected me directly to the IRS with no hold time on my end. I've been telling everyone about this service since.

Don't forget about Form 8858 if your Turkish business is considered a "disregarded entity" for US tax purposes. I got hit with penalties because I didn't file this form for my foreign sole proprietorship last year. The IRS doesn't mess around with foreign reporting requirements.

Has anyone successfully used the foreign earned income exclusion while having both W-2 income in the US and a foreign business? I travel between US and Singapore for my business but also work remotely for a US company.

Great question! I went through something similar with my consulting business in Germany. A few key points to add to what others have mentioned: 1. **Startup costs vs. operational expenses**: The IRS treats these differently. Your initial startup costs (permits, equipment, etc.) may need to be amortized over several years rather than deducted all at once. Only the first $5,000 in startup costs can be deducted immediately, with the rest spread over 15 years. 2. **Business vs. hobby classification**: Since you're losing money initially, make sure you can demonstrate this is a legitimate business and not a hobby. The IRS looks for profit motive - keep detailed business plans, market research, and documentation showing you're trying to make it profitable. 3. **Turkish tax implications**: Don't forget you'll likely owe taxes in Turkey too. Keep meticulous records because you may be able to claim Foreign Tax Credits on your US return to offset any Turkish taxes paid on the same income. 4. **Record keeping**: For foreign businesses, the IRS is extra scrutinous. Keep everything - receipts, bank statements, contracts, correspondence - and have English translations ready for anything in Turkish. The losses can indeed offset your W-2 income, but be prepared to justify every expense if audited. Consider working with a tax professional who has international experience - the rules are complex and the penalties for mistakes can be severe.