TurboTax duplicating Foreign Earned Income when using Form 2555 & Form 1116 with FEI sourced in 2 countries

[user17645583867]

I am a US citizen with Foreign Earned Income (FEI) sourced to country A and country B. I will claim the FEIE (Form 2555), followed by the Foreign Tax Credit (Form 1116) on the remaining unexcluded FEI.

In TurboTax, where do I apportion which FEI is excluded between country A and country B?

On Form 1116, when I select both country A and country B to be linked to Form 2555 (selecting "Taxpayer's" for columns A and B in "Income Excluded on Form 2555 Smart Worksheet"), the total FEI (rather than country-specific FEI) is duplicated in both columns A and B. First, this affects 1116 Line 1a (gross unexcluded FSI per country), where TurboTax inserts the total unexcluded current-year FEI once for country A and once for country B. Second, this affects 1116 Line 3d (gross FSI before exclusion per country), where the total excluded FEI is added back to Line 1a, again, once for country A and once for country B.

If this is a bug, I could easily fix 1116 Line 1a by adding a negative amount to each country on Line 1a to correct the duplicate FEI flowing from Form 2555. However, there is no user input possible to correct 1116 Line 3d. Unlinking Form 2555 entirely is also not a solution because TurboTax provides no other mechanism for adding back the excluded FEI on Line 3d. This occurs in (at least) TurboTax versions 2023, 2024, and 2025.

Note: I am fully aware of the mechanics of claiming the FTC and FEIE together and using Form 1116 Line 12 for the disallowance of foreign taxes paid on excluded income under Treas. Reg. 1.911-6.

[MarilynG1]

For the Foreign Tax Credit, you are able to designate each country separately, and the amount of income earned/tax paid for each country.

However, TurboTax currently displays a page in the interview stating that this form is being updated, with a link to sign up for email alerts.  In FORMS mode, you can manually make entries on the Foreign Tax Credit Computation Worksheet for Form 1116, which will link to Form 1116. 

You can enter the country names for each country, and the amount of income earned for each country on the worksheet.

Scroll down to the tax paid section, and enter tax paid to each country.  

@user17645583867 

[user17645583867]

Dear @MarilynG1 ,

My question is about foreign income amounts reported on Form 2555 that flow into Form 1116. Your screencap shows blank entries for columns A & B in the "Income Excluded on Form 2555 Smart Worksheet" box. What happens once you fill those in by selecting “Taxpayer’s” in both columns A & B (assuming you have unexcluded Foreign Earned Income reported on Form 2555)?

Note that “Unlinking Form 2555 [from Form 1116 via the Smart Worksheet discussed above] entirely is also not a solution because TurboTax provides no other mechanism for adding back the excluded FEI on [Form 1116] Line 3d. This occurs in (at least) TurboTax versions 2023, 2024, and 2025” (quoted from my original question).

There appears no mechanism (except  manual override of Form 1116 Lines 1a and 3d) in TurboTax to correctly disaggregate income between countries for income reported on Form 2555.

[MarilynG1]

No, the foreign income that is excluded on Form 2555 does not flow into Form 1116 for a Foreign Tax Credit.  On Form 1116, you only report foreign income that was not excluded on Form 2555 and that you paid foreign tax on (which can be entered in the FTC interview or directly on the worksheet/form). 

Some taxpayers have only Form 2555, and some only Form 1116, and some have both, depending on their individual tax situation.  

Here's more info on Form 2555 and Form 1116 Entries in TurboTax.

@user17645583867 

[user17645583867]

Dear@MarilynG1 ,

Below are quotes from the TurboTax Data Source for Form 1116 Lines 1a and 3d. Both lines include values from Form 2555. Note that the TurboTax FTC Computation Worksheet breaks down Form 1116 Line 1a into 13 subparts (a through m).

Here is the TurboTax Data Source for Form 1116 Line 1 (subpart e: "From Form 2555 Foreign earned income"): "If General category is indicated AND if the Income Excluded on Form 2555 Smart Worksheet has an entry in the column, then from the indicated Form 2555, line 27, LESS the indicated Form 2555, line 45, PLUS any amount entered on the indicated Form 2555 to the left of line 45, to the indicated column."

Thus, TurboTax Form 1116 Line 1 subpart e = Form 2555 Line 27- Form 2555 Line 45 + Form 2555 Line 45 write-in (if any).

Here is the TurboTax Data Source for Form 1116 Line 3d: "From the corresponding copy of the Foreign Tax Credit Computation Worksheet, line 1f of the corresponding column. Additionally, if this is a General category of income (Box d is marked above), and there is an entry in the related column in the Income Excluded on Form 2555 Smart Worksheet on the Foreign Tax Credit Computation Worksheet, then from the corresponding copy of the Foreign Tax Credit Computation Worksheet, line 1f of the corresponding column, PLUS Form 2555, line 45, of the indicated copy(ies) of Form 2555."

Thus, TurboTax Form 1116 Line 3d = Form 1116 Line 1 + Form 2555 Line 45.