Need help with my Foreign tax of $310, Credit or deduction?

Forum|Forum|3 months ago
March 10, 2026
1 reply
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I am a single tax payer. It appears my AMT tax is far below my 1040 tax.

TurboTax Deluxe desktop version prompts for the Simplified Limitation Election for Alternative Minimum Tax (AMT) Foreign Tax Credit (FTC) since I have foreign taxes(FT)from investments (e.g., 1099-DIV) that exceeded the $300 by only $10.

I hear once I accept to use Simplified AMT, I will have to continue using it going forward.

The last two year were the fist times my foreign tax from my 1099-DIVs exceed $300 slightly. Not understanding AMT taxes, I simply elected to take deductions for my foreign tax, as opposed to tax credit. By doing so this year, I may end up paying $248 extra taxes, with my tax bracket of 20%, because claiming my $310 FT as a deduction I only save $62 from my tax liability.

Could you advice me how to deal with my foreign taxes? If I claim them as tax credits, would TurboTax generate Form 1116 even for a few $$s over $300? Would Simplified AMT prevent me from getting full credit for FT over $300?

My 1099-DIV shows which securities produced FT, they are labelled as "Foreign tax paid-Various". Toward the bottom of "my form, those securies report "FOREIGN SOURCE INCOME PERCENTAGES. one example is

Fgn Source Inc Tot 81.96% Fgn Source Inc Qual 58.46% Fgn Source Inc Adj 0.00%

Say that same security reports
2,776.43 Total Dividends & distributions
-184.30 Total Foreign tax withheld

Will I calculate the Dividends & distributions amount attributable to Foreign tax for this security, by
multiplying "Total Dividends & distributions" amt by "Fgn Source Inc Tot" percentage
in this case 2,776.43 * 0.8196? How come TurboTax is unable to do these calculations for me? I had imported my 1099 statements.

What would I enter Country as in TurboTax? Multiple is not an option, but RIC is. Is that correct.

DaveF1006

Level 15

Yes. Switching from a foreign tax deduction to a credit is likely the best option here. A deduction only reduces your taxable income by a percentage, but a credit lowers your tax bill dollar-for-dollar. Form 1116 must be filed because you are $10 over the single-filer threshold.

If your investments are primarily in standard mutual funds/ETFs and your AMT is "far below" your regular tax, the simplified method election is usually a safe time-saver. It won't prevent you from getting your full credit; it just simplifies the math used to prove you haven't exceeded the legal limit.

Even when you import 1099s, TurboTax cannot automatically calculate your Foreign Source Income. This is because 1099-DIV forms only report Total Dividends (Box 1a) and Foreign Tax Paid (Box 7). They do not have a standard box for "Foreign Source Income."

You must manually enter this amount using the supplemental data from your brokerage (the "Foreign Source Income Percentages" you found).

For the countries, "various" is the best option to use since you have a mix of ETF and standard mutual funds.

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