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Foreign Tax Credit Carryovers

Forum|Forum|6 years ago
February 9, 2020
4 replies
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I am new to Turbotax. My prior tax returns were done by a CPA who I am no longer able to afford. In the last tax return, it appears I had a Foreign Tax Credit of $6,750. This is noted in the "Foreign Tax Foreign Tax Credit Carryover Utilization Worksheet". I have a couple of questions: (1) What is the Foreign Tax Credit and how can I use it?; (2) Do Foreign Tax Credit's expire?; (3) If I don't use it for the next year, can I use it in a subsequent year? Thank you!

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Best answer by KarenJ2

1. If you paid or accrued foreign taxes to a foreign country or U.S. possession and are subject to U.S. tax on the same income, you may be able to take either a credit or an itemized deduction for those taxes. Foreign tax credit is used to offset double taxation.

2. If you can't claim a credit for the full amount of qualified foreign income taxes you paid or accrued in the year, you're allowed a carryback and/or carryover of the unused foreign income tax. You can carry back for one year and then carry forward for 10 years the unused foreign tax. For more information on this topic (including taxes paid or accrued in years before 2007), see Publication 514, Foreign Tax Credit for Individuals.

3. Yes, if you do not use your foreign tax credit carry forward this year, you can use it in the next 9 years if you have foreign earned income (foreign business trips, for example).

K

KarenJ2Answer

Level 13

1. If you paid or accrued foreign taxes to a foreign country or U.S. possession and are subject to U.S. tax on the same income, you may be able to take either a credit or an itemized deduction for those taxes. Foreign tax credit is used to offset double taxation.

2. If you can't claim a credit for the full amount of qualified foreign income taxes you paid or accrued in the year, you're allowed a carryback and/or carryover of the unused foreign income tax. You can carry back for one year and then carry forward for 10 years the unused foreign tax. For more information on this topic (including taxes paid or accrued in years before 2007), see Publication 514, Foreign Tax Credit for Individuals.

3. Yes, if you do not use your foreign tax credit carry forward this year, you can use it in the next 9 years if you have foreign earned income (foreign business trips, for example).

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M

MBurroughes

Level 2

My error message is (Form 116 Comp Works) Foreign Tax Credit Wks- Total incoming C/O should not have a value Include this amount on the first copy of this category of income?

Huh? a $39 value appears on line 10 (Part III Foreign Tax Computation and then lower on the Foreign Tax Credit Carryovers. No idea where it come from nor how to "include this amount on the first copy of this category of income. For $39 I'd delete but cannot determine either how to or how to "fix"

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linaj20201

Level 14

I would suggest you consider our new product / features TurboTaxLive to file your 2019 taxes. This way you could have one of our tax professionals to review your tax forms.

To reach one of our tax professionals, in the TurboTax program, once you complete your taxes, before you file, you’ll be given the option for a final review of your return by one of our experts. After they completed reviewing your return, they’ll inform you of any proposed changes.

Here are the instructions:

From <https://turbotax.response.lithium.com/console/agent/4041379?>

@MBurroughes

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sfviolins

Level 2

Hi!

I moved back to the US in 2017. If I have carried over foreign passive income credit on foreign taxes from an earlier year and I’m taxed this year by the IRS on foreign capital gains that I was not taxed on by the source country (Canada) due to a tax treaty, can I claim the carried over credit amount? Basically, am I allowed to fill out a form 1116 that has a $0 amount in Part II? @KarenJ2

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SivaTTax

Level 2

I have foreign tax credit from previous years. For the current year, I have foreign income that i am reporting and including US tax, however I paid less tax in that foreign country. Turbotax still does not take the previous year's unused tax credit to enable to me take full tax credit against what I am paying as tax for the foreign income . The column has 0 values although I have entered the used credit amounts in the right places - it shows the right amt as unused but shows 0 as carry over amount to be used for current year. Any help on how to fix it would be great.

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roniasa10

Level 2

In my Tax return for 2020 under "Foreign Tax Credit Carryovers to 2021" table i have

- $0 carryover in 2020

- Total carryover of $5200 to 2021

While working on Taxes for 2021, after importing the data from 2020, I am getting this error on 1116 ws form:

" Total C/O has a value. This will require form 1116, Schedule B, which will be available on future product updates" .

I have filled form 1116 and Schedule B for 2021.

Any thoughts on how this can be fixed would be much appreciated. Thanks!

Thanks

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agreber

Level 2

@roniasa10 In case you're still needing help with this issue, you should know that Form 1116, Schedule B (aka Foreign Tax Carryover Reconciliation Schedule) is a separate form and is used to reconcile your prior year foreign tax carryover with your current year foreign tax carryover. It' not the same thing as either Form 1116 or Schedule B.

Here is a link to the instructions for Form 1116, Schedule B: https://www.irs.gov/pub/irs-pdf/i1116sb.pdf

And here is the link for the form, itself: https://www.irs.gov/pub/irs-pdf/f1116sb.pdf

Hope this helps you make sense of things (if you haven't already).