Solved. The form 1116 for the wage income tax must be first in the list of 1116's.
There is a very frustrating bug which prevents the Foreign Tax Credit from being applied correctly. If one has foreign dividends income reported, and a form 1116 for reporting foreign tax has been generated for that first, before the foreign income tax in this phase, TT will not include the income tax paid in the calculation of the FTC. The 1116 form for the income tax has to be first in the list for TT to recognize it.
To resolve this, I had to:
- In Income, delete any existing 1099-DIV with the foreign dividends. (TT will not let you delete 1116 forms that are referenced by existing 1099-DIVs.) You'll recreate these later.
- In Deductions, make sure the associated 1116(s) is/are deleted
- Reset the foreign tax credit reporting workflow (switching foreign tax handling to a deduction, then back to a credit did the trick.)
- Report the foreign tax on your wage ("general") income. (The workflow that this thread is about.)
- Go back to Income and re-enter your 1099-DIVs
(I did this manually, because I did not trust that TT would not create duplicate entries if I imported them from my brokerage again.) - Go back to Deductions and go through the Foreign Tax workflow to complete the 1116s generated for dividend income.
- Marvel at how much bigger your tax credit is now, even though it's the exact same data in the same forms, just a slightly different order in an arbitrary list. (Several thousand $'s difference in my case.)
I hope this helps somebody.
