Turbotax Foreign Income - On the 2555?

I'm not familiar with Turbotax, but on the 1040, the amount of the foreign earned income should be computed as a negative number. If you have foreign earned income (negative) plus other "other" income (positive), you add up the positive and negatives figures accordingly.   So if the majority (or all) of your "other income" is included in the foreign earned income exclusion, then "other income" should be negative.

I assume Turbotax basically follows the same format.

The thing is, the foreign earned income is both positive and negative.

First it must be totalled, exchange rate calculated, etc. as foreign income on Form 2555, and this positive amount is included with any other income on Form 1040, line 7 (total wages/salaries/tips).

Then--if you do not exceed the exclusion limit--the same figure is deducted as a negative "other income" amount.

So, really, for tax calculation purposes, foreign earned income = $0.

The problem people are describing with TurboTax is that it seems to be interpreting foreign income only as a negative amount--it's applying the exclusion--without balancing it with the positive amount. That is to say, it is not actually factoring it in as income at all.

So the total income appears to be less than it actually should be.

The thing is, the foreign earned income is both positive and negative.

First it must be totalled, exchange rate calculated, etc. as foreign income on Form 2555, and this positive amount is included with any other income on Form 1040, line 7 (total wages/salaries/tips).

Then--if you do not exceed the exclusion limit--the same figure is deducted as a negative "other income" amount.

So, really, for tax calculation purposes, foreign earned income = $0.

The problem people are describing with TurboTax is that it seems to be interpreting foreign income only as a negative amount--it's applying the exclusion--without balancing it with the positive amount. That is to say, it is not actually factoring it in as income at all.

So the total income appears to be less than it actually should be.

Do you mean:

Assume person earned $20k in the UK, no US income.

Line 7 (wages, salaries, tips)- Total Wages $20k
Line 21 (other income, including foreign exclusion) -$20k
Line 22 - Should be 0 but it is showing up as -£20k?

Is it due to people not knowing they are supposed to put the £20k in as  wages (wording of instructions)  or the program not adding the numbers correctly?