no ira or anything related to retirement. Amount of foreign income like in three times smaller than the limit. Limit itself smaller than max 107k, as she was abroad not a full year. No housing expenses. Just foreign income, less than 20k$.
My theory on why this taxation appeared, cos exclusion from the income doesn't mean exclusion from taxation in some specific cases. And w2 US income makes my case-specific.
W/o this it would go in a regular way - excluded income and excluded taxation.
But I don't see any confirmation on this on 2555 instruction or pub 54.
Answering your question - I have foreign passive income, which I am reporting under custom 1099 and crediting foreign tax under form 1116. Some US dividends and stock selling for small amounts.
And I also see that this "excluded" taxation goes not on my highest tax bracket 22%, but on 12%. Strange that not 10%
