@guptanik , both the on-line and the desktop should give you the same answers-- the reason for my pref. with desktop is that it allows one to view the not only the forms but also the underlying worksheet.
On your form 1040 you will notice that your Foreign Earned Income exclusion is shown as a subtraction ( from schedule-1 line -9 ) on line 7 -- thus your AGI is reduced by the excluded amount. But your tax computation is not based on this AGI. Tax computation shown on FR. EI worksheet ( Foreign Earned Income Worksheet ) , uses your world income before exclusion to compute the tax burden and then subtracts from this the portion contributed by the excluded income. Thus even with excluded income you are at a higher marginal rate ( for the taxed income ).
For dividends and capital gain there is a similar worksheet used to determine the rate of taxation -- it is based on utilizing the world income without regard to excluded income as to whether the tax rate is zero, 15 or higher.
Go to the forms mode and you should be able to see these worksheets and possibly explain the situation better
Does this answer your query ?
