My spouse retired in early 2014 and we both moved to the USA where we waited 7 months to get her green card (applied Mar, got October), so she lived more than half of time in USA. She reported to me her working income + retirement pension was $28K, nearly all of it spent on courts and lawyers to fight a legal persecution going on there, with expensive air travel to make court appearances.

That income was taxed by my spouse's country as well ($4000 and change). I only made $15,000 working a few months in early 2014. We also have been footing the major part of a child's $42-45,000 a year private university education.

My problem is that the Foreign Tax Credit (Form 1116) as computed by TaxAct Online came to only $1000 and change, not a dollar-for-dollar credit she paid to her foreign country. In other words, on our $45000 AGI family-of-3 income in 2014, the IRS wants to take out some $3000 more on my spouse's already-taxed retirement pension!! (The refund we were getting was $5000+ before keying in my spouse's income information, which dropped to $1970 after keying it in!)

Could TaxAct be calculating this correctly, or am I feeding the interview the wrong answers?