My dual citizenship tax filing glitch cost me $400 last April

I filed my US taxes from my home in Berlin using an online service that didn't handle my German income right. The software just lumped everything together without applying the foreign earned income exclusion correctly. I got a letter from the IRS in June saying I owed $400 plus interest. Had to hire a tax guy who specializes in dual citizens to fix it - took him 3 hours and cost another $150. Has anyone else had their tax software mess up the foreign income forms?

3 comments

3 Comments

troy_price26d ago

Treat us like some edge case" - man I got hit with a penalty from Canada for a similar software fumble back in 2018.

smith.parker26d ago

Yo I feel your pain so hard. Same thing happened to me but with a different twist. I used TurboTax and it totally ignored my foreign tax credit from Japan. Ended up underpaying by like $600 and the IRS hit me with penalties. The wild part is I actually checked the foreign income exclusion box but the software just... didn't apply it to the right forms. My tax guy said these online services treat dual citizens like we're some edge case when really there's tons of us living abroad. The $400 you got dinged for sounds about right for the IRS basic penalty structure. Now I file using a regular accountant who does this stuff blindfolded and it costs more upfront but saves me the headache of those surprise letters.

blair_nguyen26d ago

Hold up though, is a $400 surprise really that bad in the grand scheme of things? I get that getting a letter from the IRS is annoying and nobody likes paying extra, but that's like what, two nice dinners out? People act like these software errors are some kind of life ruining disaster, but in my experience the IRS is actually pretty reasonable if you just call them and explain what happened. They waived penalties for me before when I messed up a mileage deduction a few years back, no questions asked. And hiring a full time accountant who "does this blindfolded" probably costs you way more than $400 a year anyway, so where's the real savings? The whole thing feels like a lot of dramatic energy over something that's basically the price of a minor car repair. Maybe I'm just not seeing it the same way, but your mileage may vary.