Deductions & credits

When you enter your German wages in TurboTax Foreign Earned Income Exclusion section of TurboTax, you need to: 

1. Enter foreign earned income in the search bar at the top of the screen and click the Jump to link  

2. On the first screen it will ask you what form your foreign income was reported on, you need to check statement from my foreign employer (converted to USD)  

3. On the next screen enter your Foreign wages  

4. Continue through the screens answering the questions until the end 

If you have foreign taxes, you can input them in the foreign tax credit section. 

1. Type in foreign tax credit in the search bar at the top of the screen and click Jump to  

2. You will need to click through a number of screens about dividends and interest.    

3. When you get to the screen, Choose the Income Type, click on General Limitation income.  This is the category for wages.  

4. Continue through all the rest of the screens entering your Country  and continue through screens 

5. You need to enter the foreign tax amount on the screen FOREIGN TAXES PAID - COUNTRY X in the box *Foreign Taxes on Other Income*

6. If you are  claiming the exclusion, make sure that you enter on the Reduction for Foreign Taxes screen, your amount of foreign earned income from line 45 Form 2555 and total foreign income from line 27 of Form 2555 in the appropriate fields.

7. Continue through all the screens until done.

Please note that if you have been using the exclusion and decide this year to only use foreign tax credit, the IRS considers you to have revoked your choice to use the exclusion for the next 5 years.  German tax I am sure is higher than US tax so foreign tax alone might be a better answer, however, if you think you might be transferred to a low tax country for work, then you would not want to revoke the exclusion.