Foreign Tax credit is double what I expected
I seem to be having a problem with TurboTax Premiere 2025 (Desktop) with respect to Foreign Tax credit. (Sorry for the length of this post, but I wanted to explain all my steps.)
I have imported the Tax Statement from my E*Trade account. The imported 1099-DIV includes $112 on line 7 for Foreign Tax Paid.
In EasyStep, I chose the two foreign countries (Finland and Germany) for which I paid foreign tax and was able to enter the taxable qualified dividend amount for one of the countries, However, I couldn’t figure out how to add in the amount for the second country. After looping back and forth a couple of times, I finally thought I had enter the dividends for both countries.
At the end of the EasyStep process for Foreign Tax, TurboTax reported that my foreign tax credit was $224. However, the total Foreign Tax that I paid was $112. Yet TurboTax had calculated a credit of twice that amount.
I went to the Forms and looked at the Foreign Tax Computation Worksheet. Line g column A showed Germany with the correct dividend amount of $421. Finland was not listed in column B so I manually entered the country name and the dividend of $3.
The remainder of the worksheet was auto-populated. Strangely, the $3 for Finland was shown in the g row (Ordinary Income) and not in the h row (Qual. Dividends and LT Capital Gains) where the $421 from Germany was listed.
In the Foreign Tax Computation Worksheet in Part II - Foreign Taxes Paid/Accrued, Line 8, the correct amount of taxes are listed for Country A at $111 and Country B at $1.
Appropriately, in the Worksheet, there are no Carryovers listed, from prior years. It does show, however, the $112 in the 2025 row for both Regular Tax and Alternative Minimum Tax.
I then chose QuickZoom to look at Form 1116.
In Form 1116, the $424 foreign dividend total appears in line 1a. The $112 foreign tax total appears in line 8 and 14.
However, there is nothing in line 33 or 34.
Line 35, “Subtract line 34 from line 35. This is your foreign tax credit.” shows $224.
Where did the $224 come from if line 35 is calculated as line 33 minus line 34, i.e. 0 - 0?
Last year, my foreign tax situation was similar and my foreign tax credit matched the amount of foreign tax that I paid. Why is the tax credit twice the amount paid for 2025?
(BTW, I finished all my federal entries and ran the error check and no error was detected.)
Assuming the foreign tax credit should equal the amount of foreign tax paid, how do I fix this in TurboTax?