Can foreign tax paid be automatically prorated for inclusion amount in form 1116?

[puravidapto]

1 - I have foreign earned income 189750 in 2024
2 - I paid foreign tax 37950
3 - My foreign earned income exclusion is 126500
4 - My inclusion amount is 189750 - 126500 = 63250
5 - This amount is automatically included in form 1116 (foreign tax credit)

Question is: what is the tax amount associated with the amount in line 4 above? Can the software calculate itself based on the facts in line 1-2 given it already calculate the amount in line 4, or I have to do it myself?

[George4Tacks]

The fact that you asks, suggests you are not totally willing to trust the software in this situation. If it were I, I would check by doing it myself. 

[puravidapto]

Trust but verify.

Currently you may have 100 foreign earned income on form 1116 after exclusion, but the total tax you should enter is the total tax including the tax paid by excluded amount, so the tax could be much bigger than the income, let us say, 40,000.

On the next page, the total tax 40,000 will reduced by tax allocated to excluded amount. 

The system is kinda insane - you would not know what I am talking about if you have not done this. A better system would be that you enter the total foreign income and total tax paid in one place, then it will transfer the un-excluded amounts to form 1116. That said, I am happy to have one way to do it.