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Foreign income tax and tax credit

How do i fill those with turbo tax?

Do I need to fill a "Foreign Earned Income and Exclusion" form on my income area and a "Foreign taxes" deduction on my deductions & credits area?

Why is the credit listed under "Foreign taxes" much lower than the taxes i paid in the other country?

Thanks.
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3 Replies
PhyllisG
New Member

Foreign income tax and tax credit

The foreign earned income exclusion will reduce your foreign earned income credit because you cannot take the credit on income that was excluded.

To claim the income exclusion you must:

  • A U.S. citizen who is a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year, (January 1 thru December 31),
  • A U.S. resident alien who is a citizen or national of a country that has an income tax treaty in effect with the United States, and who is a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year, or
  • A U.S. citizen or a U.S. resident alien who is physically present in a foreign country or countries for at least 330 full days during any period of 12 consecutive months.

To qualify for the tax credit you will need to meet the following requirements:

  • The foreign tax must be imposed on you.
  • You must have paid or accrued the tax.
  • The tax must be the legal and actual foreign tax liability.
  • The tax must be an income tax (or a tax in lieu of an income tax)

The TurboTax program will make the necessary calculations for you.


Foreign income tax and tax credit

no exclusion was applied.

Btw, is the amount of the income that i have to set in the "Tax credit" in the foreign currency or in USD?

I was taxed around 1300$ in my country and the credit i receive is just 303$.

how is the credit calculated?

Thanks.
PhyllisG
New Member

Foreign income tax and tax credit

The amounts are converted to US dollars.  The Form 1116, Foreign Tax Credit is used to make the calculations. Visit
<a rel="nofollow" target="_blank" href="https://www.irs.gov/pub/irs-pdf/f1116.pdf">https://www.irs.gov/pub/irs-pdf/f1116.pdf</a>.
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