All, I am struggling with the right way to exclude my foreign earned income up to the maximum, and then get a foreign tax credit for the remainder of the amount. My income exceeds the FEIE limit, but I get ZERO foreign tax credit (FTC) on the remainder. I have started my tax return over from scratch, and taken the steps below to reproduce the issue. But I think that there are three questions where I am most likely going wrong - they are BOLDED below
Thank you so much for your thoughts.
INCOME SECTION:
- Foreign income Topic: entered foreign income for my wife and I
- Question #1: Should I enter my FULL foreign income here? or just the amount that will get excluded. I have proceeded by entering the FULL amount of foreign income
- My income is higher than $106k, but my wife's is not.
- When asked whose foreign income i would like to exclude, i say 'both'
- We are both US citizens, and can pass the physical presence test
- I am given a 'foreign earned income and housing exclusion' of $103,066
- My wife is given a smaller amount, equal to her incom
DEDUCTIONS AND CREDITS
- then i go to deductions and credits, and select the foreign tax credit
- i select to take the credit rather than the deduction, and I select to use the simplified method for 'simplified limitation election for AMT'
- when asked if all my foreign taxes were paid with interest and dividends - i say no (since they come from wages)
- i edit the general category income and add a country (switzerland)
- It tells me that I entered foreign earned income exclusion of $103,066 and the lower amount for my wife, on form 2555
- It asked me if this foreign income was earned in switzerland (it was) and was included in 'other gross income' for this country...
- I say 'both of our forms 2555'
- It asks me for 'other gross income' from my two employers, not enterered on form 2555.
- Question 2: Do I enter My foreign income MINUS $103,066, or do I say that I have 0 additional income, as I entered the full amount on the foreign income topic earlier? I will proceed assuming the latter.
- A few screens later, it wants 'Foreign Taxes on other income'
- I enter the Full amount of taxes that I paid in the foreign country (switzerland)
- Question 3: Am I correct that I should not apportion it based on portion that was excluded, assuming that the software will do that for me. As per above bullet, i have entered full amount.
The results of my choices are a foreign tax credit of ZERO, and very high taxes.
Have I done something incorrectly?
