TurboTax tax calculation error when you have excluded foreign income

[zhijiexia]

I think I found a tax calculation error when you have excluded foreign income and capital gain tax.

When you have capital gains tax, the tax is calculated from the capital gain tax worksheet.  

In the capital gain tax worksheet line 1 b, it asks for the foreign income, which shouldn't be counted if the income meet the exclusion rule and is excluded.  The current TurboTax treat the excluded foreign income the same way as the one which doesn't meet the exclusion rule and is not excluded, which makes the tax much higher if you have a large sum of excludable foreign income.

In my opinion, the foreign income should have been counted in 1040 line 8 (other income) and shouldn't need to be counted again in the capital gain tax worksheet.  

Any way to change or override the values in the worksheet?

I have attached an example with everything else exactly the same(income, capital gain), if a person has $100K excludable foreign income, the tax is supposed to be the same.  However, the current TurboTax has almost $10K tax difference (it will be much higher if your ordinary income is bigger).

[JeffreyR77]

The Foreign Earned Income Exclusion provides an eligible taxpayer a significant tax benefit with the ability to not pay income tax on the eligible exclusion amount. 

That earned income does not however become excluded from all tax conditions for the tax year, only from being subject to income tax on that amount of dollars excluded. 

The excluded income is included with other income not excluded to compute the amount of capital gains tax, and the amount of income tax on taxable income after deductions.