I have significant FQDs that had tax withheld at 25%. My goal is to maximize the FTC and thereby LOWER my total tax due.
I wish to choose to have theses FQDs taxed at marginal rates SO THAT I do not have to adjust the FQD amount on line 1 of the 1116 form. Am I crazy? No - because when the FQD amount on 1116 is adjusted my FTC is "x" BUT when NOT adjusted my FTC is "2x". AND - The larger FTC EXCEEDS the increase in tax calculated by choosing to forego the preferential rate treatment of the FQDs.
How does one do this?
In theory it is simple. The FQD amount is entered on line 4g of form 4952. This requires that tax due be calculated using the Schedule D Tax Worksheet where the 4g amount should appear on Line 3. BECAUSE the FQDs are treated as regular income on this worksheet the FQD amount on line 1 of 1116 SHOULD NOT BE ADJUSTED. (see IRS instructions for 4952 line 4g)
I have 2 problems
1 Turbotax does not appear to generate the Sched D Tax w/s when 4952 line 4g is non-zero.
2 Turbotax will not allow me to enter the unadjusted FQD amount on line 1 of the 1116.
Please HELP!
Thanks
