My wife and I just learned that starting in June 2016, our tax home has been in the Netherlands. Not only does this mean that we need to pay Dutch taxes retroactively, we also need to submit 1040X revised returns starting in 2016. (Fortunately, we have kept our TurboTax software for all these years.) We have both been retired since before 2016, and our only income is from 403b and 408 plans, plus social security. According to the Dutch-US treaty to prevent double-taxation, money listed on my 1099-R forms is taxed in the Netherlands as ordinary income, but this may not be the case with money listed on our SSA-1099s. My understanding is that I need to add a Form 1116 to each 1040X (i.e., for 2016, 2017, & 2018), that lists the money from the 1099-Rs as “Certain income re-sourced by treaty”. In Part II of the “Foreign Tax Credit Computation Worksheet” I then enter the amount of Dutch taxes in the “Other” [r(1)] column for “Country A” [the Netherlands] with the date 12/31/2016. (It seems to make no difference whether “Paid” or “Accrued” is checked, when calculating our Federal Refund.) At this point, TurboTax 2016 does not indicate that we are due a Federal Refund for the 2016 tax year. However, listed at the bottom of the worksheet is a “Carryover to 2017”, an “AMT Carryover to 2017”, and zero “Utilized”. So here is my question: How can we reduce our US taxes for 2016 in light of Dutch taxes that we are required to pay on our 2016 retirement income?
