For the foreign tax credit, if one attempts to obtain the credit from (for example) an international stock index fund, I have noticed that there is an error under the following circumstances:
1) One does not qualify for the adjustment exception (i.e., in this case slightly more than $20,000 in foreign qualified dividends; and 2) if supplemental information provided by the fund indicates that the amount of foreign qualified dividends *needs to be adjusted* (i.e., it is different from the qualified dividends reported on box 1b of the 1099-DIV).
In other words, the fund company supplemental information relevant to foreign tax reporting indicates that the amount of foreign qualified dividends should be decreased slightly. However, TurboTax responds with an error saying that "the value of foreign qualified dividends must be at least $XXX," where XXX is the amount in 1099-DIV box 1b. This is incorrect, since I want to have a smaller value for the amount of qualified dividends. (This is the number that will be multiplied by 0.4054 or 0.5405 to adjust the final value of F1116 line 1). Therefore, if the foreign qualified dividend number cannot be adjusted, then that ultimately will decrease the amount of foreign tax credit allowed, and more tax will be (incorrectly) owed.
If anyone has any workarounds, please post them. I have tried making a few dummy 1099 forms, but that does not work either (since it can correct the 1116 problem, but then the regular tax computation is incorrect). Thanks!
