I've long invested in an international fund, which normally reports a small amount of foreign tax, which is far below the $600 threshold on my joint (MFJ) return. So each year I was transparently getting a foreign tax credit.
- Mid-2022, that fund was internally converted to a different fund, which was realized by a sale of the original fund and new purchase. As a result, the foreign tax rose to $728, above the threshold. I was then confronted with a brand new world; a confusing Form 1116 and AMT mess, including questions about whether I wanted to elect a Simplified Method, an election I was "warned" was permanent. I went to the TTax Community forum, where I found discussions that, though not real clear, seemed to suggest I should elect the Simplified Method. I'd like to see a clear explanation about what is happening here and what I should do (though I realize this is a complicated arena).
- In any case, I followed both branches (Simplified and not) via the TTax Interview process and ended up with identical results on my forms. However, at the end of each process, I was told "Your foreign tax credit is $728." in the penultimate step, then "It turns out you don't qualify for this credit" in the final step. Yet when I look at my forms, Schedule 3, Line 1 shows a Foreign Tax Credit of $728, which then also appears on 1040, Line 20. So I remain confused. What did I not qualify for?
