Here is a way to get around the program’s problem. I tried a number of tax scenarios where there would be no US tax due, no Alternative Minimum Tax (AMT), but there would be a foreign tax credit (FTC). This rules out taking a foreign tax itemized deduction or taking the $300/$600 election. That assumes the taxpayer does not want to forfeit any use for the foreign tax paid with those other options.
I found that if the taxpayer used Step-by-Step to enter the FTC, the AMTFTC Simplification election question would not appear. But after doing so, if the taxpayer went to Forms View’s, Info Wks and checked the box “file Form 1116 even if you’re not required to,” and returned to Step-by-Step, the AMTFTC Simplification election question appears even though there was no AMT for the return. This is contrary to my impression that Step-by-Step and Forms View always cooperated with each other. And how did the AMT become an issue? This also rules out that the program glitch is from a faulty import, as previously suspected.
Also in the process of producing the Simplification question, the program removes the check mark in Info Wks from “file Form 1116 even if you’re not required to.” That seems unnecessary. Seeing that box checked would give the taxpayer more confidence that the Form 1116 was going to get filed.
The taxpayer does not get asked all the same questions in a return trip through the Step-by-Step Foreign Tax section. The program remembers the answers, but the taxpayer has no access to change some of them. To get access, select taking the Itemized Deduction rather than the Credit. After going through the questions, go back to the start of the Foreign Tax section, and this time the program wonders what the taxpayer is up to. It asks if the taxpayer wants to try the Credit instead of the Itemized Deduction. Yes, he/she does! Formerly hidden questions reappear. This time the AMTFTC Simplification election question is gone. Form 1116 will print with the other pages for filing. Voilà.
If the Simplification election had been made, it should have no bearing on a current year where the AMT is not applicable. But is the election carried from year to year by the program committing an unwitting taxpayer in a year with the AMT to an election made way back when? AMTFTC carryover equals FTC carryover in non-AMT years (that corrects my error in a previous post), but has its own carryover table. Could an unwitting Simplification election be tied to the AMTFTC carryover entry? Hopefully not.
