Can any explain step by step how I can simply input my foreign tax credit on my income that was NOT included in my foreign income exclusion? Turbo tax seems complicated

My Japan income due to early retirement was US 330,079.83 after FX conversion of 109.817. I am eligible for Foreign income exclusion of 108,700. However the remainder of US 221,379.83 income I would like to apply the Foreign taxes I paid on the remainder amount which is $32,880.54 (JP income/resident tax). How can I simply apply the Foreign Tax credit on turbo tax.

458

Expert Alumni

Mar 29, 2022 6:22:14 AM

The Foreign Earned income exclusion (FEIE) only applies to earned income such as wages or self-employed income. The exclusion cannot be used for retirement income and you must use the foreign tax credit.

The foreign tax credit is reported on form 1116.

On TurboTax Online, to get to the foreign tax credit section, please follow these steps:

Open your return
In the Search box on the top right of your screen, enter foreign tax credit and click on the magnifying glass icon
In the search result box, click on Jump to foreign tax credit
TurboTax will take you directly to the Foreign taxes section where you can follow the interview and enter your foreign tax credit.

Level 3

Mar 29, 2022 6:28:02 AM

Thanks Minh. Clarification it is not retirement money I received. It was early severance to leave the company, therefore it applies unto the 108,000 for foreign income exclusion. The remainder of the severance, I have calculated the percentage of taxes I payed to the Japan govt. However, the step by step process is confusing on turbo tax. Thanks for the link, I went through it several times but just very confusing. So will try again.

Appreciate it.

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Can any explain step by step how I can simply input my foreign tax credit on my income that was NOT included in my foreign income exclusion? Turbo tax seems complicated