Hi all,
In 2020, TurboTax calculated a larger foreign tax credit ($91) for me than the amount of foreign taxes I incurred that year ($65) due to a positive carryover from previous years. However, unbeknownst to be, on the "Foreign Tax Computation Worksheet" for Form 1116, this was not reflected. Instead, on the worksheet, the amount utilized that year was set to match the amount incurred that year, even though on Form 1040 Schedule 3 Line 1 it showed the larger utilized amount ($91).
This became apparent to me now that I am preparing my 2021 taxes, as I got the warning - "Incoming C/O Utilized should not reduce the foreign taxes below 0" - shown in the below screenshot as part of the Smart Check. To make this warning go away, it appears I just need to set the amount utilized equal to the amount incurred that year. However, since that is incorrect (i.e., I actually utilized a larger amount), this will create an incorrect carryover total. In other words, TurboTax will think I am carrying over more money than I actually am. Can anybody speak to this (e.g., @SteamTrain and @AliciaP1)?
Thanks!
