Foreign tax credits and earned income FAQs (1040)

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This topic contains answers to common questions about Forms 1116 and 2555.

Form 1116 - Foreign tax credits

The following includes answers to common questions about Form 1116.

How does the tax application calculate gross income from all sources reported on Form 1116, line 3e?

I am preparing a Form 1116 for an activity that has foreign earned income excluded on Form 2555. I have completed the general information section and entered the form and unit number in Screen 1116. What other fields do I need to complete for Form 1116?

I entered a form and unit number in Screen 1116. The tax application did not calculate any foreign amounts, why?

My client paid foreign taxes on interest / dividends. I know that I must enter the interest / dividend income in Screen B&D. Do I have to re-enter the foreign income and taxes in Screen 1116?

How does the tax application calculate the AMT Form 1116?

How do I make the simplified foreign tax credit limitation election for AMT purposes?

How do I make the election for exemption from the foreign tax credit limitation?

How does the tax application calculate foreign tax credit carryover amounts?

My client has foreign capital gains and losses. Where do I enter those amounts?

Form 2555 - Foreign earned income

The following includes answers to common questions about Form 2555.

Where do I enter U.S. days during the tax year for clients qualifying under the bona fide residence test, and where do I enter travel information for clients qualifying under the physical presence test?

The tax application printed a Form 2555 Foreign Earned Income Allocation Worksheet and a Form 2555 Deductions Allocable to Excluded Income Worksheet. What is the purpose of these worksheets?

I see force fields in Screen 2555-2 for wages, business income, and partnership income. How can I get the tax application to calculate these amounts?

My client's moving expenses related to foreign earned income were allocated over two years. How does the tax application make the determination to allocate moving expenses?

I have calculated an amount for exclusion of income earned in the previous year. How do I enter this information?

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