Form 2555 - why the tax is calculated differently ?

[sergey]

I excluded my Canadian T4 income with the form 2555. I am using TaxAct software. Although this income is really excluded from my "adjusted gross income", the tax itself is calculated differently than if I did not have this T4 income at all. I checked the instructions and it looks like the software is right - there is a different method of tax calculation if the form 2555 present. Do you know why ? I expected the excluded income means the same if I did not have this income at all.

[nelsona]

Congrchanged the exclusion such that it no longer means that the 'top' income is excluded, thus the taxsavings are now averaged. It is called the anti-stacking provision, because people used to 'stack the FEIE on top of their standard deduction and exclusions. Now it is a mix.

[sergey]

Thank you for the explanation. I figured out that in my case filing 1116 for "general limitation income" is a little bit better than FEIE with 2555.
By the way, is tax paid or accrued in 1116 for T4 income ? And what is the date the tax paid or accrued ? Is it the same like in 1116 for passive income ?

[nelsona]

You shpi;d always used tax accrued.