Impact of including foreign income on taxing US capital gains
I lived overseas and had no US income except from selling stocks and dividends. I did have earned income from working overseas and included in my taxes (add well below the foreign income exclusion). I ran the program prior to adding the foreign income and then finally with the foreign income included. Both returns had the same number in line 15 on Form 1040. The return without the foreign income shows a refund and no taxes owed. With the foreign income included in Form 1040, the foreign income is subtracted in Line 8 from Line 1 but Line 16 shows that owed taxes.
Why would line 16 be different if Line 15 were the same and the only difference was adding the foreign income into Line 1 and then the adjustment for the foreign income exclusion?
