Question

How to take both Foreign Earned Income Exclusion and Foreign Tax Credit?

Forum|Forum|4 years ago
April 12, 2022
1 reply
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Hello, could someone please confirm how to properly take both the Foreign Earned Income Exclusion and the Foreign Tax Credit in TurboTax?

Say I earned $150,000 in salary from working abroad. In the Foreign Earned Income and Exclusion section (of the Personal Income section), I would enter the full $150,000 as foreign earned income. $108,700 of that would qualify for exclusion.

Then in the Foreign Taxes section (of the Deductions & Credit section), would I enter $41,300 as Other Gross Income ($150,000 - $108,700)? And then for Foreign Taxes on Other Income, I would enter the foreign taxes I paid on just the $41,300?

The description on the Other Gross Income - [Country] page says, "Enter descriptions and amounts for any other gross income you received from sources within [Country]. Do not enter any income already reported on Form 1099-INT, Form 1099-DIV, Form 2555, or Schedule K-1." Technically, I did enter the full $150,000 in Form 2555 already, so that is where I want to get clarification on how to indicate the "leftover" income that I wasn't able to take the full Foreign Earned Income Exclusion on.

Thank you so much!

M

MinhT1

You can take the Foreign Earned Income Exclusion and the foreign tax credit, but not on the same income.

So you can take up to $108,700 as FEIE, then on the balance take the foreign tax credit. You report gross income of $41,300 and foreign tax paid or accrued on that $41,300. You reported $150,000 on form 2555, but the FEIE is for only$108,700.

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O

overwateredplantsAuthor

Thank you so much for clarifying! Okay great, then I will enter $108700 as my income in the Foreign Earned Income and Exclusion section. And then I'll put the remainder of my foreign income in the Foreign Tax Credit section.