You may be able to utilize the foreign earned income exclusion and foreign tax credits to offset double taxation.
To be directed to the US Treasury Government Website to prepare a Report of Foreign Bank and Financial Accounts, click FBAR (TurboTax does not support this form)
You may qualify for the foreign earned income exclusion (can exclude up to $102,100 in 2017) if you meet one of two tests::
Bona-fide Residency Test (BFR)
To qualify for this test, you must be a U.S. citizen. You might also qualify if you are a U.S. resident alien who is a citizen or national of a country with which the United States has an income tax treaty in effect.
You must be a resident of a foreign country (or countries) for an uninterrupted period that includes a complete tax year (January 1 to December 31) unless you are eligible to claim a waiver.
Once you have established bona fide residence in a foreign country, your qualification begins with the date you began the residence and ends with the date you abandon the foreign residence.
Your qualifying period as a bona fide resident may include only part of a tax year. You must intend to reside in the foreign country for an extended period.
Physical Presence Test (PPT)
You meet this test if you are physically present in a foreign country or countries for a total of 330 full days (approximately 11 months) during a 12-month period.
This test applies to both U.S. citizens and U.S. resident aliens. Some of this time may be vacation time in foreign countries.
If you leave the foreign country under your employer's orders, because of illness, or because of a vacation in the U.S, you fail to meet the test. However, in the event you are forced to leave because of war or civil unrest, then you may be able to claim a waiver.
This test does not depend on your intentions about returning to the U.S. or the nature or purpose of your stay.
The 12-month period can begin any day of the year and ends 12 months later. Be sure to select a 12-month period that allows the greatest qualifying period.
If you haven't been present in a foreign country for 330 full days yet, but plan to be, then you have two options. You may wait to file your return (using an extension, if necessary) until you have been present in a foreign country for 330 days. Then you can file your return and claim the exclusion. Or you can file your return now, claiming only the Foreign Tax Credit (if eligible) which is covered in the Deductions and Credits section. Later you can file an amended tax return to claim the exclusion after you have met the 330-day test.
If you have not been present in a foreign country for 330 days in any 12-month period, and you do not expect to be, then you will not meet the Physical Presence Test unless you qualify for a waiver due to war or civil unrest.
