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Deductions & credits
I assume you entered your foreign wages in the foreign earned income exclusion section of TurboTax. Foreign income needs to be entered here even if you do not qualify for the exclusion. Also in the foreign tax credit section, wages are considered general limitation income.
Your foreign tax credit cannot be more than your total U.S. tax liability multiplied by a fraction. The numerator of the fraction is your taxable income from sources outside the United States. The denominator is your total taxable income from U.S. and foreign sources.
To determine the limit, you must separate your foreign source income into categories. The limit treats all foreign income and expenses in each separate category as a single unit and limits the credit to the U.S. income tax on the taxable income in that category from all sources outside the United States.
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