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Old 01-28-2015, 10:33 AM
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Foreign Earned Income Issue!!

For the first 132 days of 2014 I was working overseas. I am able to exempt these wages because I meet the physical presence test on form 2555 (05/13/13 - 05/12/14 is my 12 month period). For the rest of 2014 I worked in the states and paid federal taxes on that income. If I were to file my foreign earned income alone, I have $0 refund and owe $0. If I were to file my US earned income alone, I get a refund. But when adding both of these to the same 1040, it says I owe money. When looking deeper into this issue, my 1040 shows my total income for the year, then subtracts the foreign earned income (prorated amount for 132 days which is more than I made, so it subtracted all of my foreign earned income), which just leaves me with the amount of income I earned in the US. So far this looks good to me, however my issue comes when it determines my tax owed to federal for the US earned income. All tax software's that I used, uses the foreign earned income tax worksheet to determine the amount of money I owe to federal because form 2555 says if line 43 on 1040 is not $0, use the foreign earned income tax worksheet. If I were to manually do my taxes and use the standard tax sheet, I would be getting a refund. So, my question is why does the software default to the foreign earned income tax worksheet if the wages on line 43 of form 1040 are not foreign earned and the foreign earned income on form 1040 was already excluded?



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