Foreign earned income reported on foreign wage statement and also on US W2.

[bethlaw]

I live and work in Switzerland and am a US citizen so also file US taxes and need to take the foreign earned income credit. My Swiss pay statement includes wages and RSU's earned while abroad.  My US W2 included only the RSU income earned while in the US.  The US W2 also includes the Swiss RSU income.  Thus the Swiss RSU income is reported twice. For example, if the W2 showed income of $400 and $150 of that is from Swiss RSU's then the $150 is also reported on the Swiss wage statement.   I paid taxes in Switzerland on the $150. So then line 1 of the 1040 shows $400 of income.  Line H shows $150.  I really only have $400 total income but line 1z shows $550 of income.  If I reduce the Line H by $150, but paid tax on it and will take the foreign earned income credit then it isn't allowed because I don't show foreign income.  I really need to reduce the W2 value by the Swiss income earned somehow.  How is this accomplished in Turbotax?  Thanks for your help!

[DaveF1006 · Accepted solution]

  First of all, you need to offset $150 from Line H, so that your income reported is only $400. Here is how to report the offset.

1. Log into your account
2. Select Wages and income
3. Less Common income
4. Miscellaneous Income, 1099-A, 1099>start
5. Scroll to the bottom of the page to Other Reportable Income
6. Other taxable income, answer yes
7. Then give a brief description of the income and the amount listed. Describe this as RSU income reported twice and then represent the amount as -150.

What this will do is report this as negative income on Schedule 1 and then it will be reflected in Line 8 of the 1040. The amount will show in Line H of the 1040 but will be offset in Line 8.

As far as the foreign tax credit, this is how to report.

1. Go to Federal
2. Deductions and credits 
3. Estimate and other taxes paid 
4. Foreign Tax Credit>start or revisit
5.  As you go through the screens, when it asks "Tell Us About Your Foreign Taxes" select none of these apply.
6. When it asks if you wish to take the deduction and credit, take the credit.
7. Continue through until you reach a screen that says "No other income or expenses" Say no
8. Continue through until it asks the income type, say General Category income
9. Next add a country pick Switzerland
10. Now go through the screens until you get to the screen that reports the gross income and taxes paid on the income. For Gross Income report $150 and then the taxes you paid on that money. The Gross income you report here isn't reported on the 1040. It's only informational and is used strictly to compute the foreign tax credit.