You are correct that you cannot apply both Form 2555 and 1116 to the same amount of income. You will apply the Form 2555 first and the remaining for Foreign Tax Credit.
After you enter the foreign income exclusion info, you will need to go through the foreign tax credit section to make adjustment how much foreign income and taxes should be used to calculate the correct amount of foreign tax credit. TurboTax does not automatically pro-rate the benefit.
Here are the steps:
- Open up your TurboTax account and select Pick up where you left off
- At the right upper corner, in the search box, type in "foreign tax credit" and Enter
- Select Jump to foreign tax credit
- Follow prompt
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