New clients are dual citizens. Spouse 1 works for a Canadian company and Spouse 2 works for a US. They also have some investment income from the US.
Their US accountant has filed a joint return for them. But he said from the total tax, 80% is attributed to Spouse 2 because spouse 1’s income falls under the foreign earned income exclusion.
Should I split the FTC 80/20 based on this, or should I base it on their portion of total income regardless of the exclusion (they make about the same, so it would be 50/50).
The problem is in 2020 they dealt with a CRA review about the same topic on their own. Only spouse 2’s claim was being reviewed. CRA only allowed a deduction based on the ratio of her W-2 income compared to the overall income on the US return, but I don’t think the clients provided any documents showing they also had investment income that was joint or that the spouse’s employment income was exempt.