How do I fill out: 2020 Foreign Earned Income Excluded Less Related Deductions Total Foreign Earned Income Less Related Deductions wage is $200k

[pk]

@Wndwo ,  should we assume that you are US citizen/Resident ( Green Card );  that you do meet the  Physical Presence Test ( 330 Days  away from the USA  within a 12 month test period) ; that your foreign earnings are  NOT from US sources ( US govt. or any of its subsidiaries or from an US employer ) ? ,

If all of this is true then  --

(a) for wages  --- you  do NOT enter your wages under wages but go down to  " other  uncommon incomes " and select  " foreign  earned income and exclusion" .  This will allow you to enter the  details of your earnings on form 2555 and  allow the exclusion.

(b) for self-employment --- you need to enter  the details of your income and  expenses  just as if  you were self-employed in the  USA -- i.e. Schedule-C entries. This will also result in a schedule -SE being included  with your return .  Thereafter you have to ask and enter  the net income ( from Schedule-C  ) - on form 2555 " foreign earned income and exclusion " ---  this would  allow you to exclude the  foreign self-employed income to the extent allowed.

Does this answer your query  and/or do you need more help ?

[Wndwo]

@pk , thank you for the reply!

Your assumptions are all correct - US citizen working abroad, meet Physical Presence Test (I pass Bona Fide Test, too), and my earnings are NOT from US sources.

I also fall into (a) for wages category.

To make sure I understand this correctly, 

 - 2020 Foreign Earned Income Excluded Less Related Deductions: I would enter Line 42: Foreign earned income exclusion on Form 2555 

 - Total Foreign Earned Income Less Related Deductions: I would enter Line 19: Total wages, salaries, bonuses, commissions, etc.

Please let me know if this is correct, and thank you so much again for your help. (I know there are many others in the community that have the same questions and will really appreciate your response!)

[pk]

@Wndwo , First an apology for  this delayed response-- please forgive.

Second, I am not sure  that I understand  what you are doing when you refer to line numbers  of a form.  This is because  if you are  using TurboTax  to prepare your return, It is a very bad idea  to work on the forms directly  ( often this will invalidate the "checks " that TurboTax does  for consistency and accuracy ) -- you should  do this ONLY on the associated worksheet.  And even then  you should be  very familiar with the  form structure / intent and the tax laws.  Suggest you let the TurboTax do these tasks  and in the interview / "step-by-step" mode.  Use the forms mode to see that the forms have the expected numbers  ( both entered and/or calculated).

Third  and only if you still need help, I have had the opportunity to work through an example   with  1. foreign wages; 2. foreign self-employment income; and 3. foreign tax credit. Must say  there are areas of the step-by-step was not quite  explicit in what it was asking for   but at this time  the forms, the worksheets all match my expectations.  So if you need help, I could talk about the screens sequence and what I did where.

stay safe 

[Wndwo]

Hello @pk ,

Thanks for the response. I should've been more explicit in what I was describing. I wasn't actually going through the forms. I was just looking at last year's 2555 from previous years to cross check.

For Foreign Earned Income Excluded Less Related Deductions, I was just trying to see if this should match with FEIE in other forms. (Turbotax calculates and tells me what FEIE is at the end of entering foreign wages....)

If it's okay with you, would you be able to talk through 3. Foreign Tax Credit screen sequences? The question I have is specifically about what exactly I should enter into 1) 2020 Foreign Earned Income Excluded Less Related Deductions; 2) Total Foreign Earned Income Less Related Deductions worksheet.

Thank you so much again!

[Hua]

I have exactly same question for this you have posted. Did you get answer? What to enter in the questions 1 & 2 below?

If it's okay with you, would you be able to talk through 3. Foreign Tax Credit screen sequences? The question I have is specifically about what exactly I should enter into 1) 2020 Foreign Earned Income Excluded Less Related Deductions; 2) Total Foreign Earned Income Less Related Deductions worksheet.

Thanks

[pk]

@Hua , can you tell me more about your situation, please .

Start with  yourself ( citizen / GreenCard/? ); if not citizen of US then of which country; where are you currently ; when did you enter the foreign country ( start of tax home ), are you employed by a local entity / US entity / or self-employed or ?; does your employer provide housing assistance ,  cost of living allowance/adjustment etc;  this is first year of FEIE ??

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

[Hua]

Thank you for your response. I am US citizen work in a foreign country. Employed by local entity. Started job in May 2021. When I file tax return last year, not qualified for FEIE, so took foreign income credit last year. This year I am qualified for FEIE (passed bona fide resident test using turbo tax), get $112000 excluded, now I want to get credit for exceeded income, that is where I see the questions not clear how to answer. Is my answer correct for “2022 foreign income exclude deductions less related deductions”, enter 112,000. For the “total foreign earned income less related Deductions”, enter total foreign income (for example 180,000). Is it correct? Thank you again for taking my questions.

[RobertB4444]

You are correct.  That is how to enter it.

When you get to that page box 1 should be the total amount that you are excluding from income.  In your case that is $112,000.  The box 2 amount should be the total income that you entered before exclusions (less any credits you took for foreign rent, etc.)  Then, if you paid any taxes in 2022 for amounts that you earned in 2021 you will enter that in box 3.

And I am back after some more investigating on this topic.  It appears that the TurboTax system does not automatically apply the foreign tax credit to the portion of the foreign earned income above the exclusion.  It has to be done manually.  AND it has to be done in the desktop program version of TurboTax.

Once you download the program you will need to enter all of your foreign income and then your foreign income tax exclusion information just as you already did (if you did it in the online program here's how to transfer it to the desktop).  

Now click on the 'Forms' button on the upper right.  This will allow you to edit directly on the forms.  Scroll down and find the 'Foreign Tax Credit Computation Worksheet' which is abbreviated '1116 Comp Wks'.   Click on that form and scroll down to 'Foreign Taxes Paid/Accrued'.

The date should already be filled in for you and the 'Paid' box is already checked.  The system just hasn't calculated the deductible amount.  You will need to work out the percentage of your income that is above the $112,000 exclusion and then work out that percentage of the taxes that you paid.  Enter it under 'Other' on the line for Country A and the system will apply it to your taxes due.

[Edited 4/18/23 04:16 PM PST]

@Hua

[Edited 04/17/2023 04:04 PM PST]

@Hua

@Hua 

[Hua]

@RobertB4444 Thank you very much!!