I am having 2 issues. I also contacted Live support and they were not able to explain and asked that I wait til mid March as it is possible that program is being updated.
Question 1. Form 1116 Copy 1 - TT calculates Gross Income from all sources. This amount is much higher that all gross income I have had as shown in in 1040. Almost 38K higher. In comparison the 2021 form calculated the same number and it was much closer though not exact as form 1040 Gross Income. So what is the source of this calculation?
Question 2. Unlike 2012 return, this year my Foreign Source dividends and LTCG is higher than 20k, so TT has the Adjustment flag set and on form 1116 Comp Work sheet has on line 1K reduced my foreign source qualified dividends and LTCG by 86% and the adjusted income is on 14% of actual amount. If I read the instructions of form 1116 the adjustment - "
To adjust your foreign source qualified dividends, multiply your foreign source qualified dividends in each separate category by 0.4054 if the foreign source qualified dividends are taxed at a rate of 15%, and by 0.5405 if they are taxed at a 20% rate. Include the results on line 1a of the applicable Form 1116."
So second question is why TT is using 0.86 instead on 0.40. I am retired and my actual earned income is much less than income from LTCGs so I am not in the 20% bracket and LTCG are taxed at 15%.
The net effect of these calculations by TT is the on 1116B it prorates the standard deduction by dividing foreign source income by Gross source income (question 1) and deducts it and this number is higher that 14% adjusted income it has come up in Question 2. So it is saying that income is less than deduction and rolling over all Foreign taxes paid instead of giving credit for 2022.
Question 3. If nothing can be done with these calculations, can the rolled over foreign tax be claimed next year even if I have little or no foreign income/tax paid?
Can anyone help with these questions?
