topic TurboTax taxing exempt Foreign Income in Get your taxes done using TurboTax

TurboTax taxing exempt Foreign Income

rnad — Sun, 29 Mar 2026 16:57:55 GMT

My foreign income is exempt. yet Turbo tax shows that I owe more taxes after I've inputted it into TurboTax. That can't be right. Why is that happening?

Re: TurboTax taxing exempt Foreign Income

pk — Sun, 29 Mar 2026 18:46:34 GMT

@rnad , while there is no clean and standard method in TurboTax to recognize foreign "Non-Taxable" income, please can you clarify

(a) what type of foreign income are you talking about ( Foreign equivalent of Social Security, Govt. pension or what )

(b) your own immigration status ( Citizen/GC or what ?)?

(d) Is this your first year, asserting this treaty condition ?

Please answer my questions. I will circle back once I hear from you --yes ?

In the meantime , is there more I can do for you ? You can add to this thread or if you want to be away from public eye, you can PM me ( just NO PII -- Personally Identifiable Information ).

Re: TurboTax taxing exempt Foreign Income

rnad — Sun, 29 Mar 2026 19:54:17 GMT

(a) what type of foreign income are you talking about ( Foreign equivalent of Social Security, Govt. pension or what ) Income working overseas for a foreign country

(b) your own immigration status ( Citizen/GC or what ?)? Citizen

(d) Is this your first year, asserting this treaty condition ? No

Re: TurboTax taxing exempt Foreign Income

pk — Sun, 29 Mar 2026 23:28:33 GMT

@rnad , if I understand you right --

1. you are a US Person, with a foreign ( Sweden ) tax home.

2. You are /were working for a local entity ---( or did you really mean working for a foreign govt.?)

3. You now want to take advantage of FEIE ( Foreign Earned Income Exclusion).

4. To achieve this exclusion ( up to maximum allowed for the year), you have meet one of two tests-------- Physical Presence Test or Bona-fide-Resident. Most people , who are present temporarily use the Physical Presence Test.

5. Physical Presence -- you have to be away from the US for 330 total days in test period of 12 continuous months encompassing the earning period to be excluded. Thus for example you entered the foreign country on 07/01/2025 , then your new tax-home start date is 07/02/2025 ( first full 24 day in the foreign country ). So to exclude your earnings in the foreign country from 07/02/2025 through 12/31/2025, you need a test period of 07/02/2025 through 07/02/2026. You file your return once you have met the 12 month and thereby exclude your foreign income and other costs paid by employer (like housing, cost of living adj., school help etc. etc. ) up to a total excludable amount per year.

6. In TurboTax , you enter your foreign earned income as follows: under personal income tab, choose ( I will choose what I work on", then from "Other misc. income" category select " Foreign Earned Income", this will then walk you through filling out the form 2555 and also enter the income and the exclusion amount.

Is this what you are talking about? Does this make sense ?

Do you need more help on this ?

Re: TurboTax taxing exempt Foreign Income

rnad — Mon, 30 Mar 2026 06:13:22 GMT

More help? You haven't answered my original question:

Why would my taxes increase after entering excluded foreign income when my only other income is from capital gains?

Re: TurboTax taxing exempt Foreign Income

pk — Mon, 30 Mar 2026 19:49:28 GMT

@rnad , sorry for the mis-communication .

Are you using FEIE ? Or are you suing FTC ?

If you meet the form 2555 requirements to exclude your income, and you entered the foreign income in the correct place , then your Foreign Earned Income should have been excluded. I cannot see your screen and so depend totally on your answers.

Where am I missing the boat ?