Foreign Tax Carryover

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I have a Foreign Tax Carryover credit going back seven years. The calculated carryover for this year's return is $1679. My allowable foreign tax credit is $493 for taxes paid this year. When I try to apply the carryover credits from prior years, the $493 doesn't change. Why am I not able to get any credit for those prior years? Will I ever be able to get them back?

Mike9241Answer

Level 15

the FTC is generally based on your effective federal income tax rate (not necessarily what Turbotax calculates) times your foreign income after deducting certain direct and allocated expenses. if the foreign taxes are at a higher rate than this you have a carryover. Under the law, the current year is used first. you can carry over each year's unused credit for 10 years after which it is lost. Your situation is not uncommon. The calculation is on form 1116

Mike9241

Answer

Level 15

Mike9241

rp5528Author

Level 2

So - if I understand it correctly -the more I make (start taking an RMD for example) which puts me at a higher tax rate - the less chances I have of recapturing those prior taxes, assuming they are roughly the same amount each year.