I am wondering if I am able to file mine and my husbands taxes with Turbo. We have income from both WA State and Australia. Income from Aus is minimal and less than 1 yr.

[KarenJ · Accepted solution]

Yes you can use TurboTax to file your return with foreign income.   TurboTax allows you to use the foreign earned income exclusion and foreign tax credits to help offset double taxation (Australia and US tax on the same income).

If you were in Australia less than a year, you will probably not qualify for the foreign earned income exclusion however, Australian tax is so high that you will probably be fine just using the foreign tax credit.  You may also take any 2019 foreign tax paid as a deduction on Sch B.  However, you are likely to have a lower tax bill using foreign tax credit than if you deduct any foreign taxes paid.

If you are not familiar with foreign tax credits, the foreign income tax for which you can claim a credit is the amount of actual tax liability you pay or accrue during the calendar year.  You choose whether you want to use the paid or accrued method. So if you did not pay any Australian tax until 2019, you need to choose the accrued method.  Once you choose the accrued method, you must use the accrued method going forward each year.

Please see the attached for more information on foreign tax credits: 

https://www.irs.gov/pub/irs-pdf/p514.pd

[Edited 03.18.20 | 4:00 pm]