How is "gross income from all sources" calculated on Form 1116 (line 3e)? I end up with gross foreign sources income (line 3d) being larger than line 3e. Can it be?

Forum|Forum|5 years ago
March 7, 2021
12 replies
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Can gross foreign source income (line 3d on Form 1116) be larger than gross income from all sources (line 3e on Form 1116)? It sounds counterintuitive, yet that is what it comes out being. There is no detailed calculation that I can see anywhere within Turbotax worksheets that shows how gross income from all sources is calculated.
Can anyone help to demystify this?
Thank you!

Best answer by rogge1722

From TT's guidance:

Form 1116 (COPY 1) : Line 3ea
Calculated Gross income from all sources:

This is total income before deductions and is the sum of:

Form 1040, line 1 plus
Form 1040, line 2b plus
Form 1040, line 3b plus
Schedule 1 (Form 1040), line 1 plus
Schedule 1 (Form 1040), line 2a plus
Schedule C, line 7 (all copies) plus
All gains reported on Schedule D minus Schedule D, line 11, Subtotal Line A(Form 4797, Gain from Part I) plus
All gains reported on Form 4797 plus
Form 1040, line 4b plus
Schedule E, line 3 total plus line 4 total plus
Schedule K-1 Worksheet - Partnerships Box 16, Code B (if it has a value); otherwise income reported on line 1, 2, OR 3 plus any amount on line 4 plus
Schedule K-1 - Partnership Additional Information page 1, Box 11 section,Code A, line 1 (if positive) and line 3 and line 4 and Code I, line 5
Schedule K-1 Worksheet - S Corporations Box 14, Code B (if it has a value); otherwise income reported on line 1, 2 or 3 plus
Schedule K-1 - S Corporation Additional Information page 1, Box 10 section, Code A, line 1 (if positive) and line 3 and line 4 and Code H, line 5
Schedule K-1 Worksheet - Estates and Trusts, Box 14 Code B : Foreign Tax Information section, line 7 (if it has a value); otherwise income reported in Part III lines 5, 6, 7 and 8 plus
Schedule F, line 11 (all copies) plus
Form 4835, line 7 ( all copies) plus
Schedule 1 (Form 1040), line 7 plus
Form 1040, line 5b plus
All positive income amounts on the Other Income Statement.

R

rogge1722Answer

Level 10

From TT's guidance:

Form 1116 (COPY 1) : Line 3ea
Calculated Gross income from all sources:

This is total income before deductions and is the sum of:

Form 1040, line 1 plus
Form 1040, line 2b plus
Form 1040, line 3b plus
Schedule 1 (Form 1040), line 1 plus
Schedule 1 (Form 1040), line 2a plus
Schedule C, line 7 (all copies) plus
All gains reported on Schedule D minus Schedule D, line 11, Subtotal Line A(Form 4797, Gain from Part I) plus
All gains reported on Form 4797 plus
Form 1040, line 4b plus
Schedule E, line 3 total plus line 4 total plus
Schedule K-1 Worksheet - Partnerships Box 16, Code B (if it has a value); otherwise income reported on line 1, 2, OR 3 plus any amount on line 4 plus
Schedule K-1 - Partnership Additional Information page 1, Box 11 section,Code A, line 1 (if positive) and line 3 and line 4 and Code I, line 5
Schedule K-1 Worksheet - S Corporations Box 14, Code B (if it has a value); otherwise income reported on line 1, 2 or 3 plus
Schedule K-1 - S Corporation Additional Information page 1, Box 10 section, Code A, line 1 (if positive) and line 3 and line 4 and Code H, line 5
Schedule K-1 Worksheet - Estates and Trusts, Box 14 Code B : Foreign Tax Information section, line 7 (if it has a value); otherwise income reported in Part III lines 5, 6, 7 and 8 plus
Schedule F, line 11 (all copies) plus
Form 4835, line 7 ( all copies) plus
Schedule 1 (Form 1040), line 7 plus
Form 1040, line 5b plus
All positive income amounts on the Other Income Statement.

S

SBtaxquestionsAuthor

Level 2

Thanks a lot!

P

pmokeefe

Level 2

I received the same error while working on my 2021 taxes. It turned out the problem was in a Form K-1 where I had a box 14 with Foreign taxes paid. There is a field called "Gross Income Sourced at the Beneficiary Level". By default TT had 0 there, even though it could have easily computed it from the information supplied in the K-1. After I put in the proper amount there was no error later in Form 1116. Note I had did this by restarting with a copy of the Tax Return saved before starting work on Form 1116. So I'm not sure if it's possible to easily fix the error once it has occurred.

B

budlite01

Level 2

I meticulously checked the calculations for "gross income from all sources" using the recommendations above and also just simply adding together gross income from all sources. I do not have a K-1 entry. Unfortunately, there does not appear to be a way to verify the figures used to do the calculation in TT. After spending over an hour checking every entry for every source of income, I am now convinced that there is an error in the application that overestimates this figure. Further, there is no way to overwrite the correct figure. TT you need to fix this!

P

pmokeefe

Level 2

Sorry to hear that. Then only thing I can suggest is perhaps your case is analogous but not identical to mine: that the problem shows up in Form 1116, but the actual source of the problem is in some other form. I changed nothing in the input to Form 1116, only in K-1 (obviously somewhere else in your case) One possibility would be to look at the forms where - in your case - the foreign income/taxes were originally declared. But it sounds like you have already done extensive checking, so maybe the problem is different in your case, unfortunately.

Good luck!