All foreign income filer. i believe my tax rate should be 33% and not 28% as calculated by turbo tax.

[magmoo123]

271k income

172k foreign income/housing exclus

12,600 std ded

16,200 exemptions

its calculating my taxable income by 28% 

shouldnt it be 33%

married file joint 

[pk]

Assuming that your total foreign earnings ( one person earning) of $271K, no other foreign deductions ( for simplicities sake), MFJ, Two dependednts, fully qualified to exclude  max foreign earnings, I  get  the following:

Your income 271,000

Foreign Earned Income exclusion of $101300 ( for 2016);   your AGI for US tax purposes is $169,700.  Hence your taxable income is $140,900 and  your tax  is $38471 -- margina rate  of 25% , effective rate of 22.67% ( based on AGI  after foreign  earned income exclusion ).  Is this what you are getting ?

[pk]

Just to add a little of explanation as to how the  tax is computed -->
For foreign earned income exclusion ,  the program computed the  tax on the  whole  amount of taxable income ( assuming there was no exclusion ) i.e. current taxable income plus the excluded income.  Then it computes the  tax that would  have been levied  for the excluded  amount ( note that these two are not necessarily at the same marginal rate  but per the  tax table only ). This second amiunt is then subtracted to come up with the  actual tax liability.  So the  marigina rate really does not  mean much here.  Hope this helps and TurboTax is correct in its computation , matches within rounding error when doen by hand

[magmoo123]

Thank you. However, Im still unsure the bracket being used. If I have income of 271,000 and total deductions of 28,800 (12,600 std ded plus 4 exemptions @ 4,050) that would give me an AGI of 242,200.  242,200 falls within the 33% bracket for married filing jointly of (231,451 - 413,350). Therefore, if i had 172,000 in foreign income exclusion and housing exclusion(101,300 plus 70,700). my tax would be calculated as 33% of 70,200 or approx 23K.

242,200 x .33 = 79,926
172,000 x .33 = 56,760
difference = 23,166 see above

Instead TURBO TAX has calculated my tax(using 28% tax bracket) to be 19,656 or 28% x 70,200

[pk]

what is the 70,700 ---- earned income exclusion is a maximum of 101,300  -- this includes salary/ wages plus any housing expenses provided by the employer. Or are you saying that you and your wife both worked  at foreign employer (s)  and therefore more can be excluded.   As I said  with the figures earlier , Turbocomputes the correct figures for me  --- so what am I missing here.  As I see it with the figures I used  ( see above ),  US taxes are computed on a taxable income of  (271K less  deductions and exemptions ) 140, 900  + 101300, (the excluded )as a tentative amount and then the contribution of that excluded amount is subtracted  and you end up with  a tax of    approx 38xxx.
Also note, please look at the tax tables or extension thereof -- you will see that for  242,000 you multiply by 30% and then suubtract an amount due to the  lower  brackets and therefore becomes something like 54,xxx and then the contribution of the  excluded amount  of around 16K is  subtracted  bringing the final figure to 38xxx.  Please read  the  instructions for the taxtable to see how it is computed.
But more to the point what is it you are trying to get to --- that Turbo is wrong ( No chance with these figures ), that  you would be fined by the IRS for  wrong  tax -- TurboTax guarantees its computations.  So what are you trying to do ?

[magmoo123]

101,300 only applies to earned income(for each person) and DOES NOT include foreign housing exclusion or 70,700 in my case. it's based on where you live and determined by a daily rate. See form 2555 for instructions.  You can claim both. It does not include expenses provided by employers either. These would be considered income. My point is not to say Turbo is wrong I'm just trying to figure out how they came to that conclusion. It actually benefits me tax wise

[magmoo123]

by the way TT calculated my tax to be 19,995 and not 38k

[pk]

ah yea -- I now remember about housing ( in my time of foreign assignment  this was called COLA by ) expenses -- the employer includes all of it -- paid / incurred by the employer and you include in your income  the offset from the baseline ( it was Washington DC )--- and this is what you can exclude . so if I  take the whole 242 K as you gross shown  an d then exclude  the foreign earned income exclusion amount -- as I had done before , and then take an additional 70K 0t housing ( assuming that is  diff between baseline  and actual amount,  then yes  your tax may go down quite a bit more than the 38K that I computed earlier.  So Turbo may be correct  at 19K but it looks  too low to me. The methodology is the same as describedabove-- I just cannot try out with a real program because I am out of the country