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Old 04-09-2018, 03:06 PM
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Post Foreign Tax Credit rules

My husband and I lived in France and always claimed the Foreign Earned Income Exclusion (form 2555). We moved back to the US in the middle of 2017 and may want to claim the Foreign Tax Credit instead (Form 1116). Here's the question, which the IRS didn't even have anyone available to answer:

Fact: we excluded our 2016 French income under the foreign earned income exclusion (2555) on our 2017 US taxes.

Fact: we paid French taxes (SO much money) in 2017, on the French income from 2016.

Question: If we excluded the 2016 French income on the previous tax return, can we use the Foreign Tax Credit to deduct taxes paid in 2017, on the 2016 French income?

I've always done my own taxes and know the law fairly well, but this one is stumping me and I don't want to get in trouble. However, claiming the Tax Credit this year will save us about 4,000 more in taxes than using the earned income exclusion as in previous years.

Thanks to anyone who can help!



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Old 04-10-2018, 11:06 AM
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Fact: we excluded our 2016 French income under the foreign earned income exclusion (2555) on our 2017 US taxes.=========>>I guess you had to exclude your 2016 income that you earned in France in 2016 on your 2016 return NOT on your 2017 reutrn.

Fact: we paid French taxes (SO much money) in 2017, on the French income from 2016.=======>>same as above; you had to pay your french taexs on your taxable income that earned in france in 2016 on your 2016 french return.

Question: If we excluded the 2016 French income on the previous tax return, can we use the Foreign Tax Credit to deduct taxes paid in 2017, on the 2016 French income?============>>>I guess you need to fiLE AN AMENDED RETURN for 2016, 1040x, with the irs; you excluded the 2016 taxable income that you earned in France in 2016 on your 2017 return, yiou can not claim FTC paid in 2017 on your 2016 return since you my caim it on your 2017 return.



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Old 04-10-2018, 12:04 PM
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Thanks, I should have been clearer. We claimed our 2016 French income on the 2016 *tax year* return, filed in April 2017. So there's no need for an amended return. My question is, since we excluded the 2016 income when we filed for the 2016 tax year, can we claim a tax credit for taxes paid during tax year 2017 (filing now) against this income. My assumption is no, but I wanted to be sure.



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Old 04-11-2018, 03:25 AM
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Quote:
Originally Posted by tlcox View Post
Thanks, I should have been clearer. We claimed our 2016 French income on the 2016 *tax year* return, filed in April 2017. So there's no need for an amended return. My question is, since we excluded the 2016 income when we filed for the 2016 tax year, can we claim a tax credit for taxes paid during tax year 2017 (filing now) against this income. My assumption is no, but I wanted to be sure.
No as you said;since you already applied the FEIE on the sam e income that you earned overseas in 2016 , so yu can not also apply FTC on the sam e 2016 income you already claimed on yur 2016 US return. Foreign Tax Credit
Once you choose to exclude either foreign earned income or foreign housing costs, you cannot take a foreign tax credit for taxes on income you exclude



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