I have foreign tax credit carryover from 2019-2022 of >10k. In 2023 3 things happened:
1. I got married. We are married filing jointly for the first time.
2. Spouse (nonUS) earned foreign income for part of the year, then moved to the US, and later got a job and earned some US income. She has never lived in the US before this, and thus never earned any US income previously.
3. I earned no foreign income in 2023, as I resided/worked in the US the entire year.
In turbotax, I first input all our US sourced income, and saw the estimated refund. Then I added her foreign income and foreign tax paid (for the foreign tax credit for 2023). The estimated refund decreased, because she paid a low tax rate on that foreign income relative to our marginal rate in the US.
At no point has my carryover tax credit been applied. Can anyone explain why not? I understand that I can only use the carryover credit on foreign-earned income (aka hers....not my own, as it is US based). Am I missing something? Shouldn't it get applied to her foreign-earned income, so that our refund should not reduce after adding it?