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Get your taxes done using TurboTax
Good morning !! I had a chance to look at your case and here are the results.
- I did notice there was difference in the tax rate without the exclusion and with the exclusion. Without the exclusion, the tax rate was 15.4% and with the exclusion 22%.
- In further analysis, I looked at the Foreign tax Exclusion Worksheet and found my answer.
- Even though you were able to exclude your foreign income, you weren't able to exclude the tax assessed on the full amount of the income. You are probably thinking that "this isn't right."
- After searching the Foreign Income Exclusion IRS site, it states the following, "If you qualify for and claim the foreign earned income exclusion, the foreign housing exclusion, or both, must figure the tax on your remaining non-excluded income using the tax rates that would have applied had you not claimed the exclusion(s)
- That is why your tax rate for the excluded income is higher because the tax liability is determined on your overall AGI, which includes the Foreign Income that was excluded.
- Still, the difference between owing more than $10,000 in taxes versus owing $237 is sizable.
- Hope this helps.
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‎April 12, 2022
10:09 AM