kuarora
Returning Member

How to add foreign income which is already included in w2

Hi,

 

I have a stock grant from canada. It has vested recently.

As per employer policy, It reports entire RSU income on W2 (as wages in Box1), as US requires to pay FICA on entire transaction whereas partial (pro-rated basis) is included on T4 from canada i.e. Foreign Income. 

 

How do I add foreign income? If I add foreign income, my total wages goes up as foreign is counted twice.

DavidS127
Expert Alumni

Get your taxes done using TurboTax

You designate your W-2 with foreign income as such on the screen "Do any of these uncommon situations apply to this W-2?".  That screen comes after you enter your W-2 information, just continue through the program until you get that interview question.

 

Once there, you have choices for "Worked outside the U.S." and "Foreign or international organizations".  Select the one that applies to your situation.  Once you make the correct selection, TurboTax will recognize that the W-2 you entered has foreign income.

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heartetak
New Member

Get your taxes done using TurboTax

Just to check, this will designate things correctly in TurboTax even if only some of the earnings on that W2 were earned outside the U.S.? My employer is U.S.- based, but I was sent by them out of the country for 3 months to work in different locations and was subject to tax laws in those countries.

heartetak
New Member

Get your taxes done using TurboTax

KarenJ2
Expert Alumni

Get your taxes done using TurboTax

You will need to enter your W-2 as you normally would.

 

Then you need to enter foreign earned income into the Search box at the top of the screen and click on Jump to

 

Start to go through the foreign earned income exclusion screens.  Check yes that you entered your W-2

 

Then you arrive at the screen, Confirm your Foreign Wages Already Entered and you will see your total W-2 wages.  You need to allocate your wages to determine what was earned overseas and what was earned in the US.  A bonus related only to your foreign assignment would be considered 100% foreign. (Wages are sourced by workdays.  If you had 240 workdays during the year and 80 were spent working overseas then you would allocate your wages as 80/240 to determine your foreign wages).Then enter a wage adjustment in the box so that the total will be your foreign wages.

 

On the screen Would You Like to Try and Exclude Your Foreign Earned Income? You need to answer Yes or your foreign information will be deleted.

 

Continue to go through the screens and it will tell you you do not qualify for the foreign earned income exclusion.  However if you paid foreign tax you may be eligible for the foreign tax credit.  

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