Total FEI Dedns

[kvinci]

I am filing my taxes and keep getting an error for total FEI Dedns....I have filled everything out correctly, why isn't this field populating? I see that others have had this problem in the past and when they manually enter the info- all of their credit is wiped out. 

[rjs]

What is the complete exact error message that you are getting, word for word?

What is the field that is not populating - what form and what line number? (There is nothing in a federal tax return called "FEI Dedns.")

Where in TurboTax are you getting the error?

[pk]

@kvinci while I recognize  your frustration with the issue, your post gives me little to go on and/or why TurboTax is misbehaving.  So please could you tell me more :

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

(b) Is your tax home foreign ?  Which country?

(c) Is this your first time claiming Foreign Earned Income Exclusion ?  If not , how did you file  for 2023 ?

(d) If this is  your first year claiming FEIE, when did you start your foreign tax home ?  What test period for form 2555 are you using --- i.e. the start date  and the end date  for the 12 month continuous test period bracketing  your foreign earnings for tax year 2024?

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

[kvinci]

thank you!  I am filing US taxes but have foreign earned income in Italy (Italy resident for entire tax year). I am a US citizen and an Italian citizen. It is the first time I am claiming Foreign Earned Income Exclusion. I used June 6, 2023 as the start date. Thank you! 

[kvinci]

I get the error when the federal check runs. It pulls up the foreign tax credit computation sheet and item 12 has red boxes that need to be filled in.

[pk]

@kvinci , thank you for your response

1.  TurboTax will ask for a few different dates --- for form 2555 it will ask for 

         (a) start of the test window -- in your particular case and based on your response -- 01/01/2024

         (b) end of the test window  -- in your case 12/31/2024

         (c) when did you establish  foreign tax home -- 06/06/2023

2.   By including the full 2024 as the test period, it will include all your foreign earnings eligible for exclusion.

3.   Note that your passive earnings (-- i.e. rental income ) is not part of the Foreign Earned Income Exclusion.  For this passive income, you have to fill out a schedule-E for US purposes ( i.e.  Tell TurboTax that you have  rental income under business income tab,  recognize the gross rental income, deduct  allowable expenses , etc.  include  depreciation etc.  per US rules), and then , if and only if  Italy taxed this income, you have to fill out a form 1116  ( passive income category ) for redressing  the double taxation by both Italy and US on the same income.

If you need more help on this  ( FEIE ) or the rental income, please consider  adding to this thread or PM me and I will happy to walk you through the preparation of a correct  return.

Is there more I can do for you ?

[kvinci]

I am sorry, but my problem remains. Part 3 is coming up as an error. It is saying that I need to enter something in item 12 a (1) "current year foreign earned income excluded less related deductions" and 

(2) total foreign earned income (FEI) less deductions" 

[rjs]

It appears that you are claiming both the Foreign Earned Income Exclusion and the Foreign Tax Credit. Is that because your foreign earned income is more than $126,500?

Here is part of the TurboTax help for the Foreign Tax Credit Computation Worksheet, describing what to enter on lines 12a1 and 12a2. When you make these entries the errors should go away.

"Lines 12a1 and 12a2 must be entered when applicable.

"If you excluded foreign income on Form 2555, enter on line 12a1 the amount of foreign earned income excluded (Form 2555, line 45) reduced by any itemized deductions that relate to the foreign income excluded.

"Enter your total foreign earned income for the year on line 12a2. This is the total foreign earned income from Form 2555 (both copies), line 26, reduced by deductible expenses allocable to that foreign earned income."

You didn't say whether you are using TurboTax Online or the desktop TurboTax software. If you are using the desktop software you can get additional help in forms mode. Right-click on any field and click "About xxxx" at the bottom of the menu that pops up.

[kvinci]

fantastic- this is the problem!  Yes, I am claiming both because the foreign earned income is more than $126,500. I am using a desktop version (windows).

[kvinci]

The exclusion is different for myself and my husband (married filing jointly).  DO I add them up or enter twice?

[kvinci]

fantastic- this is the problem! Yes, I am claiming both because the foreign earned income is more than $126,500. I am using a desktop version (windows).

Do I add the amounts together for myself and my husband or enter them separately? Thank you

[rjs]

---

@kvinci wrote:

The exclusion is different for myself and my husband (married filing jointly).  DO I add them up or enter twice?

---

This is the first time you have mentioned your husband. Everything up to now has been "I" and "my."

What do you mean by "The exclusion is different for myself and my husband"? What is different?

If your husband is a U.S. citizen and has foreign earned income, you have to enter the foreign earned income and the exclusion separately for each of you. You will have two Forms 2555, one for each of you. You can each exclude up to $126,500. I believe you can add them together for the foreign tax credit on Form 1116, provided that both incomes are the same category and from the same country.

[pk]

@kvinci , agreeing with the answers from my colleague @rjs  and having read through the whole thread

(a) the situation as I see it is -- two US persons ( citizen/GreenCard/Resident for Tax purposes ), having a tax home abroad, meeting the  Physical Presence Test, each having foreign earned income and filing MFJ

(b) thus  you will have two form 2555  ( as mentioned by @rjs ), one for each spouse, and thus excluding  maximum allowed for each spouse.

(c) Any unexcluded income i.e. amounts  above the max , can be aggregated and eligible for  Foreign Tax Credit on form 1116 -- general category.  I don't think there is any prohibition to not aggregate and instead file  two separate  form 1116 -- i.e. one  for each spouse with un-excluded wages/self-employment income. -- if that makes it simpler for record keeping. Note here TurboTax may ask for total foreign source income  and  excluded income to be able to compute foreign income & tax thereon for Foreign Tax Credit -- this is for each  spouse and not joint amounts.  There should  not be any adjustments for this general category.  However, there are  inclusions  on form 2555 for  any assistance/ employer paid amounts for housing, cola etc.

(d) if you have any passive income that is taxed by both your tax-home country ( Italy ) and US, then that foreign tax may  eligible for  foreign tax credit -- form 1116 , passive category .  In this area there may be adjustments for compliance with treaty conditions.

Is there more one of us can do for you ?