filing when you only have foreign earned income and claiming foreign tax credit

[jherna13]

Hi everyone,

I'm a US citizen married, filing jointly, and both my husband and I only earned income in The Netherlands in 2024. We want to claim the foreign tax credit, but are a bit confused about where to enter our foreign earned income - in form 1040 and form 1116? We are not claiming FEIE, only FTC, no US source income, and as I understand it, all of our salary is US taxable. I'm just confused because admittedly I am late in filing 2023 taxes (I am owed, I do not owe), and when I finished those it was all "fine", but now it says I owe a couple of thousand dollars. The only difference is that for 2024 I have vested RSUs (not sold) that I am reporting, but the salary amount, and the foreign taxes paid amount is the same. What am I missing or doing wrong?

[pk]

@jherna13  what I get from your post -->

1.    YOU a US person ( citizen ) have a tax home in Netherlands and have been there since at least 2023  ( when did you start your  foreign tax home ?  generally the first full day in  ) a foreign land.

2.     Your spouse  is s US person ( please confirm / correct ).

3.    In 2023  you used  FTC rather than  FEIE --- please can you tell why you chose this path

4.    In 2023, since all your active earnings were foreign, the form 1116 with limitations still resulted in 100%  Foreign Tax Credit -- with no carry back/forward

5.   In 2024 your earnings situation same  with the exception of  added income due to RSU vesting. Therefore TurboTax is showing a tax due ( for US return).  Please can you tell me --

              (a) is the RSU from a local or US entity ?

              (b) what is the quantum of the income being declared/recognized ( the diff  between FMV and the basis of the shares vested in 2024 )?

               (c) Has NL taxed the vested  & therefore "imputed" income ?

               (d) how are you reporting this "vesting" caused income -- part of active income, investment , "other" or what ?

               (e) are you paying FICA or participating in NL FICA equivalent ?

6.    Your comment about where to enter  active income for purposes of FTC,  requires that I understand how you filed for  tax year 2023.  How did you show your active income -- as other , business income  or what ?   

Sorry for all these questions but to me these need to be considered for an understanding of the situation.   I will circle back once I hear from you --yes ?

Grusse