If you are living abroad, TurboTax will guide you on entering your information. You may need to upgrade in order to claim either the Foreign
Earned Income Exclusion or the Foreign
Tax Credit.
if
you file as married filing jointly and you are both US citizens living outside the US and
meets the Bona
Fide Residence Test or the Physical
Presence Test, you might be able to claim an IRS
- Foreign Earned Income Exclusion (Form 2555) but it you are paying higher taxes in your foreign resident country then you may want to claim the Foreign Tax Credit instead (Form 1116).
When entering your foreign earned income information, make sure that you report it under the foreign earned income section in USD.
To enter this
transaction in TurboTax, log into your tax return (for TurboTax Online sign-in,
click Here and click on "Take
me to my return") type "foreign earned
income" in the search bar then select "jump to foreign earned income". TurboTax will guide you in
entering this information.
You would be able to
take a Foreign Tax Credit for
taxes paid in Canada on Canadian income that is also taxed in the US.
The Internal Revenue Service has no official
exchange rate. The IRS will normally accept any posted exchange rate
that is used consistently. You can translate the foreign currency to U.S.
dollars using the yearly average currency exchange rate for the tax year.
In general, use the exchange rate prevailing (i.e., the spot rate) when you
receive, pay or accrue the item. Please refer to the following IRS links for
more information about Foreign
Currency and Currency Exchange Rates and Yearly
Average Currency Exchange Rates.
