Foreign Tax Credit instead of Foreign Earned Income Exclusion

[MJ50]

Can you take the foreign tax credit instead of foreign earned income exclusion? Once I input the foreign earned income using Turbo Tax Premium, it automatically takes an option to exclude. I'm currently working and living in a foreign country and paid the earned income taxes here. How do I get the foreign tax credit instead of exclusion?  Thank you.

[SusanY1]

Yes, you can do this.  When you are working in the Foreign Earned Income and Exclusion section of TurboTax (which is where you enter that income), answer No to the question 
"Do you want to try to exclude the income?".

You will then enter the taxes paid under Deductions & Credits under Estimates and Other Taxes Paid, Foreign Taxes.

[MJ50]

How do you take the exclusion and foreign tax credit 

[MayaD]

Any un-excluded income  ( foreign earned income exclusion ) , is eligible for  foreign tax credit--if that income is taxed by both the USA and the  "other" country.

To take the foreign income exclusionL

1. Go to Federal Taxes.
2. Go to Wages and Income .
3. Scroll down to Less common Income. 
4. Scroll down to Foreign Earned Income and Exclusion.

To take the foreign tax credit:

1. Go to Federal Taxes .
2. Go to Deductions and Credit.
3. Scroll down to Estimates and Other Taxes Paid and click show more.
4.  Go to Foreign credit. Make sure to enter first the foreign Income that didn't not qualify for the exclusion.

[MJ50]

but somehow, after the exclusion, it doesn't give me foreign tax credit.. please help.

Also, can you erase all the information and then start again in Turbotax Premier please?

Thank you.

[LeonardS]

Yes, you can start your return over by using use Clear and Start Over.

• If you haven't already done so, sign in to your TurboTax account.
• Select Take me to my return button. 
• On the welcome back screen, in the left-side menu, select Tax Tools.
• Then select Clear & Start Over
• Answer Yes in the pop-up to confirm.

[QA2020]

I have the same problem. If I choose "No, I know I don't qualify to exclude my foreign income". I cannot use foreign tax credit. Could you help with more details?

[SusanY1]

The income is not transferring from Foreign Earned Income and Exclusion area currently after telling the program you do not qualify. 

Instead, enter it as "Other Reportable Income" under Miscellaneous Income under Less Common Income.

When you enter the information for the tax credit, enter the income again (to reconcile the credit, it also will not report to income from here.) 

Sorry for the confusion - when working on tax credit you will need to answer "yes" that you have reported the income elsewhere. 

Foreign wages earned  will be "general category income" when working through the credit section.

@QA2020

[QA2020]

Thanks.

I still fill the "Foreign Earned Income and Exclusion" with foreign income but choose "No" for FEIE. And in Foreign Tax Credit part, I fill the number of foreign income and the foreign tax with type General category income. It seems OK. Are these two solutions the same?

But I get another problem that I cannot use this Tax Credit to cover foreign bank interest. All my last year's income is foreign income, why cannot I use all the Foreign Tax Credit?

[QA2020]

@SusanY1 

If reporting directly in 1099-INT, the foreign interest is treated as US income and it will change the amount of available foreign tax credit. Is there any way to claim the foreign interest as foreign income ?

[jtprice86]

I'm struggling to go back and amend several year returns (2020 and 2019) from FEIE to FTC. I answered no to an FEIE in the amended return and try to take the credit under FTC without success. When I decided to use the FTC rather than the FEIE for my 2021 taxes, the process was simple as I just added where the income was earned, and it automatically calculated the expected taxes here in South Korea. This thread has helped, but I seem to be experiencing the same problem as other users. Is there another related thread which could guide me through the amendment from and FEIE for 2020 and 2019 to and FTC for both years?