While running into this same problem, I uncovered a related issue:
TurboTax does not automatically enter the lower figure on Form 1116, Line 18 if you calculate your tax using the Qualified Dividends and Capital Gain Tax Worksheet. By default, it simply enters your AGI on that line. In order to get TurboTax to enter the lower number on Line 18, you have to go into Forms mode and check a box.
If you do this, it increases the maximum allowable foreign tax credit that you can take. In my case, if I do this for 2020, I am allowed to claim all my foreign taxes paid as a credit, therefore there is no carryover to 2021.
So, I filed an amended 1040-X for 2020 and did not have to deal with the hassle being discussed here for 2021.
So, the moral is - if you use the Qualified Dividends and Capital Gain Tax Worksheet to calculate your tax, make sure to check the box to use the lower value on Form 1116, Line 18. It might moot this whole discussion for you.
