In each of the past two years, my wife and I (we file a joint return) have paid slightly more than $600 in foreign taxes on dividend income. As a result, Turbotax has instructed us to file a Form 1116, with the result being that our allowable tax credit has been less than the amount we paid (and less than the $600 limit allowing one to report the credit directly on Form 1040 without filing the Form 1116). This has produced a seemingly anamolous outcome, in that had we paid less in foreign taxes (say an amount slightly less than $600), we would actually have received a larger credit. This year, our foreign taxes on dividend income was $560, but Turbotax is again directing us to file a Form 1116, presumably because we have a carryover of foreign taxes of $96, which again puts us in excess of the $600 limit that allows one to avoid filing a Form 1116. The result is again anamolous, as our allowable credit is about two hundreed dollars less than we would have received if we could have simply claimed the $560 on Form 1040. My question is (and I aplogize for taking so long to get here) whether we can ignore (or waive) the $96 carryover and simply claim the $560 we paid on Form 1040, and if so will we have to do an override to accomplish that and whether that will precude an e-filing by Turbotax.
