I have been following this conversation, but stopped participating as I had nothing to add and was waiting for the update. I've learned a lot from reading many of the posts and now that the 1116 update is partially working, I have been experimenting to see if I can somehow get Turbo Tax to run without errors. I found a way to bypass form 1116 but I have a question that I hope a tax expert can answer.
I have foreign tax of $673. All information was imported from my investment company. If I take the credit, it increases my refund by $161 and the remainder is carried over to next year. I have no carryover from previous years, but smart check still gives me the error regarding carryover. If I go into the download from my investment company and manually change the foreign tax paid to $600 (maximum for mfj to avoid form 1116 requirement), the refund goes up an additional $259 to $420 (seems counterintuitive, but that's what happened). Turbo Tax then asks me if I want to agree to not using any carryovers to which I answer yes. Then I run smart check and there are no errors. Seems odd that there is such a difference and that now I can proceed with filing. I always figured if you under reported, the IRS wouldn't care; however, in this case I would be under-reporting and getting a bigger refund. The question is: Is it okay to do this? It's not worth it if the IRS decides to flag it and audit me because the number doesn't match the Investment firm number. I have never intentionally cheated and I have never been audited and I want to keep it that way. Also, why can't Turbo Tax give the same option to forgo any carryovers when I use the correct number as imported? This would solve a lot of headaches. I can certainly understand why someone with a much larger foreign tax may not want to forgo the carryover; however, when the number is low, why not leave it up to the individual taxpayer and give us the option?
Any insight would be much appreciated.
