# Need Help in Understanding Carryover Worksheet for form 1116



## manny.j (Dec 4, 2011)

Hello:

My wife and I reside in the UK and need some advice on Form 1116.

Our gross income is less than $99K (which we understand is the exclusion limit for US citizens living abroad).

There are two categories in this form interest to us: Passive Category and General Category. 

For both the categories I included my income from each of the sources (job (General), interest (Passive)) and also clearly stated the taxes I paid in the UK for these income sources.

We then noticed that there are worksheet for Form 1116, which seem to include these tax amount we paid in 2014 into "Total Carryover to 2015 for regular Tax".

Could someone clarify to us what this means as we have no idea what carryover implies and what are the implication for this worksheet when we fill 2015 tax year?

Many thanks,

Manny


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## BBCWatcher (Dec 28, 2012)

I'm not exactly sure which part of the form you're looking at, but a couple points:

1. The Foreign Earned Income Exclusion does not allow you to exclude _gross_ income. It only allows you, if you qualify, to exclude _foreign earned income_, just as its name suggests.

2. If you have excess Foreign Tax Credits -- in other words, if your foreign income tax was greater than your hypothetical U.S. income tax on that income in that same category -- then you can carry those excess credits forward and apply them to the same category of income on a future tax return, up to 10 years into the future. You can also apply the excess credits to the prior year's tax return, though that usually requires filing an amended return. Form 1116 makes allowance for those carry forward and carry back scenarios.


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