topic I add income under "Former Earned Income and Exclusion" but "Foreign Tax Credit" doesn't work. It say "You’ll need to finish adding your foreign tax payments". advice? in Deductions & credits

I add income under "Former Earned Income and Exclusion" but "Foreign Tax Credit" doesn't work. It say "You’ll need to finish adding your foreign tax payments". advice?

hbendea — Mon, 06 Apr 2020 00:57:58 GMT

Re: I add income under "Former Earned Income and Exclusion" but "Foreign Tax Credit" doesn't work. It say "You’ll need to finish adding your foreign tax payments". advice?

pk — Mon, 06 Apr 2020 02:27:11 GMT

@hbendea , just to be sure that I understand your situation--

(a) you a US citizen/Resident( GreenCard) moved abroad and work there for a foreign entity

(b) you have lived there long enough to qualify for the physical presence test ( 330 days of presence in foreign land in a test period of 12 months ) and therefore your tax home is foreign and that your foreign earned income is eligible for exclusion

(c) you have foreign earned income above the allowable exclusion and which has been taxed by the local tax administration and therefore you need foreign tax credit.

Now explain to me what is not working -- where do you need help. Please answer

Re: I add income under "Former Earned Income and Exclusion" but "Foreign Tax Credit" doesn't work. It say "You’ll need to finish adding your foreign tax payments". advice?

DHP — Sat, 11 Apr 2020 21:00:24 GMT

I am encountering the same issue. I am a U.S. citizen who lives and works as a resident in another country, but have rental income in the states. My wage income is taxed by the foreign country and I pay foreign taxes directly to them. I enter all my information on the "Wages & Income" screen that I can, but at no time does it ask me how much I paid in foreign taxes as I would have expected in the "Foreign Earned Income and Exclusion" section. I then go to the "Deductions & Credit" screen and follow the standard tutorial for "Foreign Tax Credit" but get stuck at the same error in the subject line after checking "Yes, I paid foreign taxes this year." It wants me to go back and finish entering in my foreign taxes paid. The question is: Where? Any help would be greatly appreciated.

Re: I add income under "Former Earned Income and Exclusion" but "Foreign Tax Credit" doesn't work. It say "You’ll need to finish adding your foreign tax payments". advice?

DHP — Sat, 11 Apr 2020 21:02:28 GMT

Two more things, I have been a bona fide resident for several years, annotating as much in the system, and my income now exceeds the benefits of the Foreign Earned Income Exclusion. As such, a Foreign Tax Credit would suit me better.

Re: I add income under "Former Earned Income and Exclusion" but "Foreign Tax Credit" doesn't work. It say "You’ll need to finish adding your foreign tax payments". advice?

rogge1722 — Sat, 11 Apr 2020 22:58:03 GMT

Do you have any 1099's or K-1's and if so, do they indicate any foreign source income?

Re: I add income under "Former Earned Income and Exclusion" but "Foreign Tax Credit" doesn't work. It say "You’ll need to finish adding your foreign tax payments". advice?

DHP — Sun, 12 Apr 2020 09:10:20 GMT

I do not have any 1099's or K-1's. For my primary wage I am provided a German Lohnsteurerbescheinigung and no U.S. W-2. I use the Lohnsteurerbescheinigung to file my taxes. My income and taxes are listed in Euro.

Re: I add income under "Former Earned Income and Exclusion" but "Foreign Tax Credit" doesn't work...

KarenJ2 — Sun, 12 Apr 2020 15:10:39 GMT

When you enter your German wages in TurboTax Foreign Earned Income Exclusion section of TurboTax, you need to:

Enter foreign earned income in the search bar at the top of the screen and click the Jump to link
On the first screen it will ask you what form your foreign income was reported on, you need to check statement from my foreign employer (converted to USD)
On the next screen enter your Foreign wages
Continue through the screens answering the questions until the end

If you have foreign taxes, you can input them in the foreign tax credit section.

Type in foreign tax credit in the search bar at the top of the screen and click Jump to
You will need to click through a number of screens about dividends and interest.
When you get to the screen, Choose the Income Type, click on General Limitation income. This is the category for wages.
Continue through all the rest of the screens entering your Country and continue through screens
You need to enter the foreign tax amount on the screen FOREIGN TAXES PAID - COUNTRY X in the box *Foreign Taxes on Other Income*
If you are claiming the exclusion, make sure that you enter on the Reduction for Foreign Taxes screen, your amount of foreign earned income from line 45 Form 2555 and total foreign income from line 27 of Form 2555 in the appropriate fields.
Continue through all the screens until done.

Please note that if you have been using the exclusion and decide this year to only use foreign tax credit, the IRS considers you to have revoked your choice to use the exclusion for the next 5 years. German tax I am sure is higher than US tax so foreign tax alone might be a better answer, however, if you think you might be transferred to a low tax country for work, then you would not want to revoke the exclusion.