Hi all,
I am a Greencard holder in the UK, and i am trying to accurately complete my Form 1116. Foreign Tax Credit.
I have entered my foreign income (wages) and my capital gains (8949) in my 1040 initially. Then i have moved on to Form 1116 to claim my FTC.
My income and taxes is the following for each income bucket:
1. General Income
- UK Salary: $107982
- UK Taxes: $ 24342
- US Taxes: $16015
- FTC applied: $16015
2. Passive Income
- Crypto Sale (Capital Gains): $1438
- GGT: $0 ( UK has a personal exemption of GBP 6k / year)
- US Taxes: $196
- FTC applied: $0
The problem i have got is i am getting no credit towards the Crypto sale. My general income UK taxes are way more than the US equivalent and i have a large carryforward. However I can not apply a FTC for my capital gains as i did not directly pay any tax to this income category, as you receive a GBP 6k personal allowance in the UK.
It just seems a little unfair as a 1040 tax return just accumulates all the taxes into one bucket, however the FTC has to be applied from different buckets, so although i have paid way more UK tax in total, i can't apply it to the Capital Gains tax.
Have i completed from 1116 correctly? Any help or advice would be greatly appreciated.
Thanks!
