@juinnder
what it is trying to here is compute the ratio of excluded foreign active income to total foreign active source income. It then uses this to allocate US tax liability to the unexcluded income.
When in forms mode , click the "help-center " at the top right. Then ask for help on form 1116. This should open up a very large document explaining how TurboTax goes about filling up form 1116 and the entries it expects from the user. Below I have appended the notes for the relevant entries:
Lines 12a1 through 12a5:
If you excluded some or all of your foreign income on Form 2555, Foreign Earned Income Exclusion, the foreign taxes you paid must be reduced by the amount of taxes that relate to the foreign earned income that has been excluded on Form 2555. Lines 12a1 through 12a5 are used to determine the allocation ratio to be used in apportioning the amount of taxes applicable to excluded income.
The program performs the computations on lines 12a3, 12a4, 12a5 only for the General category of foreign income (i.e., if box b is checked at the top of this worksheet). Lines 12a1 and 12a2 must be entered when applicable.
If you excluded foreign income on Form 2555, enter on line 12a1 the amount of foreign earned income excluded (Form 2555, line 45) reduced by any itemized deductions that relate to the foreign income excluded.
Enter your total foreign earned income for the year on line 12a2. This is the total foreign earned income from Form 2555 (both copies), line 26, reduced by deductible expenses allocable to that foreign earned income.
NOTE: If you are subject to the alternative minimum tax, review line 12 on the Form 1116 AMT Worksheet for any applicable entries.
Hope this helps.
Is there more I can do for you ?
