Foreign tax credit

[user17759445623]

I am trying to file my taxes and really struggling with entering foreign income from my job abroad so that I recieve the foreign tax credit and am fairly disappointed with turbo tax's interview prompts. I have entered the income from my foreign job in to income section and have declined to take the foreign income tax exclusion then in the deductions section I started inputting the details for the Foreign Tax Credit and it asks me for the income amount again and for the amount of tax I paid. And this seems to work, but the details of my income from my foreign job that i input in the income section does not seems to be carried over into the deductions section because in that deductions section it says that my gross annual income is double what it should be. so turbo tax is obviously counting my income twice. which I guess makes sense because I have to enter it in the income section, but then have to enter the same number again in the foreign tax credit deductions section. So what I want is a dummy's step by step instruction on how to do this without doubling up my gross income. Also, there are a ton of questions in the ftc section about alternative minimum tax and I ignore them because I dont understand them, but it should be clearer or simpler, no? Why do I pay 100 dollars to spend ages on this and it not be easy! Someone brighter than me help!

[pk]

@user17759445623 , understand your frustration with the process, abstruse questions and unclear direction. So please accept my apologies ( I am a volunteer helping users and have no financial or otherwise connection with Intuit).  But before I can create a reasonable step-by-step instruction for you I need some facts"

(a) Are you a US person  ( citizen/GreenCard) ?

(b)  Where is your tax home ?   Has it been so for the whole of 2025 or only part of the year?

(c)  Are you trying to exclude/ take Foreign Tax Credit for wages/ self-employment for  part year or for the whole year of 2025 ?  Is this because  you are dual status for 2025 or what ?

Please answer my questions and I will happy to help you through this.

I will circle back once I hear from you--yes ?

[user17759445623]

yes I'm a us citizen

Tax home is abroad and yes I live abroad

I want to take the foreign tax credit, not exclude the income. The reason I want to take the tax credit is i believe this will give me more tax relief as the country i am in taxes my income at 26% at the source and I would like to get thr tax credits not exclude the income 

Thanks for any help that can be provided however my question is less about tax rules and more about how to get the tt software to do it's job.

[pk]

@user17759445623 , you do realize  that while under tax treaty  US will recognize the full foreign taxes paid, but the allowable  FTC for the year is limited to the LESSER of that paid  to a foreign taxing authority and that imposed by US on the same doubly taxed income.   Thus in your situation your US taxes may come down to zero and the rest of the paid  ( FT) will be carried  ( backward and forward )  but in each year you will need foreign source income.  Generally it is an asymptotic recovery and may or may not help.

I would suggest using both ways  and see which works better for you .

AS I understand from your earlier post --- you entered the gross foreign income in two places --- you need to enter only when using the  form 1116 -- foreign source income, general category, source country , paid, when paid and the  Foreign Tax paid.  That should work.

When done go to forms mode and look over  Form 1116 Comp wks.   and form  1116 to make sure all makes sense -- any changes, make only on 1116 Comp. wks. and not on form 1116 itself.

Then look at form 104/01040SR wks. and finally form 104/1040-SR

Does this make sense ?

Let me know if this solves your issue and /or any more I can do for you --yes?

[user17759445623]

Thanks this is helpful and having a good idea of the tax implications I am pretty sure that FTC is the best way forward. But it seems that turbo tax is double counting my foreign income because in the FTC section it says my gross income is more than it should be and then it kicks me into Alternative Minimum tax.

In order to get TT to allow me to use the FTC interview I have to have foreign income reported in the Income section. I have tried just not reporting the foreign income in the income section and it just wont let me proceed with the FTC interview. How do I get the turbo tax program to recognise that the foreign income I declared in the income section of the TT prompt interview (and yes I declined to take the Foreign Earned Income Exclusion) is the same income that is then reported in the deductions section which deals with Foreign Tax Credits? Currently it is double counting that income and not carrying it over. Because it doesn't carry it over into the deduction section I am prompt to re-enter the same foreign income amount  and then state the amount I paid in foreign tax. It does carry over foreign income associated with dividends from my stock account but wont carry it over for my wages from my foreign job.  Again, I get that I can choose either the FEIE or FTC. My issue is not with the tax question it is literally how to use the TT program. Thanks again for any help that can be provided! really appreciate it!

[user17759445623]

As an update i have now played with the program and did not report my foreign income in the income section, but did list it in the deductions section. But this did not fix the problem because in the deductions section it still states my gross income to be about 40k more than it should be and then when i go to the federal summary section it doesnt include my foreign income which i thought I reported in the dedections section. 

Meanwhile tt is giving me badges for participation points. Would really prefer a software program that is intuitive and without glitches.