I am in an uncommon situation for federal tax return. I worked in a foreign country for an American company for the first 4 months before coming back and working for the same company for another 2 months. Then I got laid off and received severance package and the non-qualified deferred compensation (deferred from 2021 and before). All of the compensations are on my W-2. I have a few questions when I am working on 1a of the Form 1116 in Turbotax Premium to get the foreign tax credits back in my tax return:
1. I am going to allocate the foreign gross income on a time basis. Foreign source income is the amount that results from multiplying the total amount of pay by the fraction of days in which services were performed outside the U.S. Should I use the Gross pay of the 6 months as the total amount, or deduct health insurance and 401k contributions first?
2. Since my employment terminated at the end of June, the severance package and deferred compensation I received from July are not part of the foreign income even though they are from the same company I served. Am I right?
