Welcome back! Ask questions, get answers, and join our large community of tax professionals.
cancel
Showing results for 
Search instead for 
Did you mean: 

Foreign credit vs. foreign income exclusion

Highlighted
Level 2

My first foreign income return.

Can a tp take the foreign tax credit without the foreign income exclusion? Another words, include the income but take the credit?

I can't figure out how to get pro series to do this.

Labels (1)
0 Cheers
1 Solution

Accepted Solutions
Highlighted
Level 15

Yes, it is permissible to claim the foreign earned income exclusion and FTC, except the credit (along other deductions) must be reduced to the extent allocable to the exclusion.  For straight forward cases, ProSeries should handle that without your intervention, generally.

If your client has paid or accrued foreign taxes in a fiscal year country or is a dual earner whose spouse also claims foreign earned income exclusion or if your client has allocable SLL/OFL/ODL, etc., you may then need to make certain adjustments on your own as Intuit's tax products are not programmed for those situations.

---------------------------------------------------------------------------------
Still an AllStar

View solution in original post

0 Cheers
8 Replies 8
Highlighted
Level 15

Yes, it is permissible to claim the foreign earned income exclusion and FTC, except the credit (along other deductions) must be reduced to the extent allocable to the exclusion.  For straight forward cases, ProSeries should handle that without your intervention, generally.

If your client has paid or accrued foreign taxes in a fiscal year country or is a dual earner whose spouse also claims foreign earned income exclusion or if your client has allocable SLL/OFL/ODL, etc., you may then need to make certain adjustments on your own as Intuit's tax products are not programmed for those situations.

---------------------------------------------------------------------------------
Still an AllStar

View solution in original post

0 Cheers
Highlighted
Level 2
No, INCLUDE the income, but tax the credit. I can't seem to get Pro-series to do that. This is a software as much as if not more than a tax question.
0 Cheers
Highlighted
Level 15
What you mean by "No, INCLUDE the income, but tax the credit"?
---------------------------------------------------------------------------------
Still an AllStar
0 Cheers
Highlighted
Level 15
You have to include the income before you can take the exclusion.  You may then take a credit on foreign-source earned income that is not excluded under §911.
---------------------------------------------------------------------------------
Still an AllStar
0 Cheers
Highlighted
Level 15
Ah, now that I re-read your question, I see that you want to forego the election for §911 but take a foreign tax credit instead.  Yes, you can do that but your client would be deemed to have revoked the election.  A full credit can then be claimed.  This could be beneficial for high-tax jurisdictions.

How did you enter the compensation and the sourcing for F.1116?  What outcome do you see now in the program?
---------------------------------------------------------------------------------
Still an AllStar
0 Cheers
Highlighted
Level 3

Can Tax Payer be deemed as revoking §911 if they never elected it in the first place? I mean if client has always been taking the foreign tax credit from the inception and not foreign income exclusion. So they never elected the exclusion. IRS will not consider that Revoking? Would they? I have a client and they are just beginning to file their back year taxes since they moved abroad. I think it is beneficial to NOT EXCLUDE their foreign income and take the foreign credit.  Maybe in later years, we may consider electing the §911 for the TP. what do you think?

0 Cheers
Highlighted
Level 2
proseries is forcing taking the income exclusion.
0 Cheers
Highlighted
Level 15
It can't force you unless you have entered sufficient details for either BFR or PPT to qualify for the exclusion.  This article may help.
https://accountants-community.intuit.com/articles/1617032-how-to-enter-foreign-earned-income-when-th...
---------------------------------------------------------------------------------
Still an AllStar
0 Cheers