filing when you only have foreign earned income and claiming foreign tax credit

jherna13 — Thu, 09 Oct 2025 11:23:17 GMT

Hi everyone,

I'm a US citizen married, filing jointly, and both my husband and I only earned income in The Netherlands in 2024. We want to claim the foreign tax credit, but are a bit confused about where to enter our foreign earned income - in form 1040 and form 1116? We are not claiming FEIE, only FTC, no US source income, and as I understand it, all of our salary is US taxable. I'm just confused because admittedly I am late in filing 2023 taxes (I am owed, I do not owe), and when I finished those it was all "fine", but now it says I owe a couple of thousand dollars. The only difference is that for 2024 I have vested RSUs (not sold) that I am reporting, but the salary amount, and the foreign taxes paid amount is the same. What am I missing or doing wrong?

Re: filing when you only have foreign earned income and claiming foreign tax credit

pk — Thu, 09 Oct 2025 17:44:56 GMT

@jherna13 what I get from your post -->

1. YOU a US person ( citizen ) have a tax home in Netherlands and have been there since at least 2023 ( when did you start your foreign tax home ? generally the first full day in ) a foreign land.

2. Your spouse is s US person ( please confirm / correct ).

3. In 2023 you used FTC rather than FEIE --- please can you tell why you chose this path

4. In 2023, since all your active earnings were foreign, the form 1116 with limitations still resulted in 100% Foreign Tax Credit -- with no carry back/forward

5. In 2024 your earnings situation same with the exception of added income due to RSU vesting. Therefore TurboTax is showing a tax due ( for US return). Please can you tell me --

(a) is the RSU from a local or US entity ?

(b) what is the quantum of the income being declared/recognized ( the diff between FMV and the basis of the shares vested in 2024 )?

(d) how are you reporting this "vesting" caused income -- part of active income, investment , "other" or what ?

(e) are you paying FICA or participating in NL FICA equivalent ?

6. Your comment about where to enter active income for purposes of FTC, requires that I understand how you filed for tax year 2023. How did you show your active income -- as other , business income or what ?

Sorry for all these questions but to me these need to be considered for an understanding of the situation. I will circle back once I hear from you --yes ?

Grusse

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filing when you only have foreign earned income and claiming foreign tax credit

Re: filing when you only have foreign earned income and claiming foreign tax credit