Foreign Tax Credit Not Used by Turbotax Premier 2023

Forum|Forum|2 years ago
February 20, 2024
1 reply
7 views

I transferred all my Dividends received from Merrill Edge to Turbotax Premier. I noticed that foreign Tax I paid has not been taken into account by Turbotax. The foreign Country (France) taxes paid were over $1,400. Whether you include the tax amount or not, or add smaller or bigger amount, it makes no difference to the calculations. I still have the same Refund for my entire taxes. I also tried both "other source" and "RIC" options and no change to the calculations.

Can you please help to understand why Turbotax is doing this? It seems it is not using Form 1116 at all.

DaveF1006

Level 15

It depends. It might be that you were not able to utilize the foreign tax credit this year and that the entire amount of your credit is a carryover that can be carried back one year or carry forward for the next ten years.

The IRS limits the foreign tax credit you can claim to the lesser of the amount of foreign taxes paid or the U.S. tax liability on the foreign income. The excess limit is created when the U.S. taxes on that foreign income are greater than the foreign taxes paid.

To verify if you have a carryover in Turbo Tax Online, go to tax tools>tools>delete a form. Verify if you have a Schedule B Form 1116 in your list of forms. If you do, then you have a carryover, unless you have carryovers from prior yeas.

If you are using the software, go to the forms mode in your software and look in your list of forms. Schedule B Form 1116 should be a form listed in your return.

**Say "Thanks" by clicking the thumb icon in a post. **Mark the post that answers your question by clicking on "Mark as Best Answer"

ssffnn

Level 2

On 1099 DIV worksheet box 7 you can find the reference to Form 1116.

Line d. Declare your total foreign income (out of the total in BOX 1a) received from this particular source (a brokerage firm, e.g Fidelity), and also enter the foreign tax paid in the first line of Box 7.

Line b. choose the Form 1116 option, which is generate a tax credit, instead of claiming it on Schedule A (option a.). TT generates the form once you choose this option.

Line c. If you have foreign income from more than one country (e.g. Schwab, holding another foreign stock of yours ) then put these different ones in different columns, A,B, C in Form 1116. You will also check off the corresponding columns in 1099 DIV

zatakanAuthor

Level 2

That worked. Thank you for the guidance.

I have one more question related to Foreign Tax Credit. Where can I input expenses such as Depository Bank Fees? I input this in "Other Interest Expense" section in "Foreign Taxes" but TurboTax is not deducting this amount. Is there another place that I can input this?

Thank you