Yes, you can combine the two in this way or you can use only the credit if it works out better for you. Sometimes, because of the way the credit is calculated on the pro-rated income it can be better to use only the credit. You are allowed to choose the option that works best for you.
However, if you have taken the Foreign Earned Income Exclusion in the past and do not continue to use it, you can't "skip" a year. Not taking the exclusion after taking it in years prior (without amending those returns) is considered revoking the election, and there is a five-year wait before it can be used again without IRS permission.
To add the foreign taxes paid into TurboTax follow these steps:
- Click on Deductions & Credits.
- Scroll to Estimates and Other Taxes Paid and Click on Show More (you may first have to click on Show all tax breaks to see this section).
- Click Start beside Foreign Taxes.
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