Can you carryover negative AGI to next year's taxes?

While you generally can't directly "carry over" a negative AGI to offset income in the following year, what you're looking at might be a Net Operating Loss (NOL) situation, which can sometimes be carried forward. For individuals, a negative AGI often results from business losses exceeding other income. If your negative AGI is from business losses (not just from the FEIE and alimony), you might have an NOL that could be carried forward. However, the FEIE itself doesn't create a loss you can carry forward - it simply excludes income from taxation. Alimony payments (for agreements executed before 2019) are above-the-line deductions that reduce AGI but don't typically create carryover opportunities on their own. The key is determining if you have actual losses from a business activity that exceed your other income.

After dealing with a similar negative AGI situation last year, I discovered taxr.ai https://taxr.ai when I was searching for help with my amended returns. It totally saved me from making a huge mistake with my foreign income exclusions. I had uploaded my tax documents and the AI spotted that I was miscalculating how the FEIE affected my AGI and pointed out that I couldn't actually carry forward the negative AGI like I thought. The report explained exactly what portions of my income/losses were eligible for potential carryover and which weren't. For me, it turned out I had some business losses mixed in with the FEIE that COULD be carried forward as an NOL, which I wouldn't have figured out on my own.

I need to admit I was wrong about AI tax tools. After my skeptical comment earlier, I decided to give taxr.ai a try with my complicated expat tax situation. I'm honestly shocked at how well it worked. It correctly identified that my "negative AGI" situation wasn't actually eligible for carryover in my case, but it did find a business loss component that qualified as an NOL. The analysis explained exactly why the Foreign Earned Income Exclusion portion doesn't create carryover opportunities (since it's already a tax benefit), while providing the correct forms and calculations for the portion that did qualify. It even flagged an error my previous accountant made with the foreign housing exclusion calculation that I never would have caught. For anyone dealing with negative AGI situations involving foreign income, definitely worth checking out before filing amended returns.

If you're trying to amend multiple years of returns with this negative AGI issue, you might want to talk to an actual IRS agent to confirm your approach before filing. I tried calling the IRS for three weeks straight about my foreign income situation and kept hitting dead ends until I found https://claimyr.com through a tax forum. They got me connected to an IRS agent in about 20 minutes when I had been trying for weeks. You can see how it works here: https://youtu.be/_kiP6q8DX5c - basically they navigate the phone tree and wait on hold so you don't have to. The agent I spoke with clarified exactly how my NOL carryforward should be reported on my amended return and which forms were needed specifically for my situation.

I need to eat my words about Claimyr being a scam. After my skeptical comment, I was still stuck with questions about my negative AGI situation from some overseas contract work, so I decided to try it anyway. Surprisingly, it actually worked - they got me through to an IRS tax law specialist in about 35 minutes. The agent was able to confirm that in my specific situation, the negative AGI from my FEIE couldn't be carried forward, but I did have some business losses that qualified for NOL treatment. She walked me through exactly how to complete Form 1045 to calculate the carryforward amount and how to report it on my amended return. For complex tax situations involving multiple years and international income, speaking directly with the IRS saved me from making a costly mistake on my amendments. I'm impressed the service actually delivered what it promised.

One thing nobody has mentioned yet - if your negative AGI is partly from capital losses, remember you can carry forward up to $3,000 in capital losses each year. So while you can't carry forward the negative AGI itself, certain components of what created that negative AGI might have carryforward potential. In my case, I had a negative AGI year in 2021 that included some significant capital losses. While I couldn't carry forward the entire negative AGI, I've been carrying the capital loss forward at $3,000 per year which has helped reduce my tax burden.

Watch out with amended returns and negative AGI situations! I tried to DIY this myself last year and ended up getting a notice from the IRS because I incorrectly tried to carry forward my entire negative AGI (which included FEIE). The IRS ended up disallowing my claimed carryforward and assessing additional tax plus interest. Make sure you're only carrying forward components that actually qualify - like business losses, not just the negative AGI that resulted from exclusions like FEIE.

Just to add another perspective here - I went through something very similar with my 2021 and 2022 returns. Had a negative AGI in 2021 due to a combination of FEIE and some business losses from freelance work that dried up during COVID. The key thing I learned (after initially getting it wrong) is that you really need to break down what specifically created that negative AGI. In my case, about $18k of the negative was from legitimate business losses that could be carried forward as an NOL, but the rest was from the FEIE which doesn't create a carryover opportunity. I ended up having to file Form 1045 to properly calculate the NOL portion and then amended my following year's return to claim it correctly. The business loss carryforward definitely helped offset some of my 2022 income, but it was way less than I initially thought I could carry forward. If you're dealing with multiple components creating the negative AGI like I was, I'd strongly recommend getting professional help or at least double-checking your work before filing the amendments. The IRS doesn't mess around with incorrectly claimed carryforwards.