Deductions & credits
Yes, you would need to prepare the Form 1116 to see if you qualify for a credit for the foreign taxes paid. Your other option would be to treat the taxes as an itemized deduction on schedule A, but the credit usually yields a better tax benefit. In either case, you need to work through the Foreign Taxes section which you will find in the Deductions and Credits area of TurboTax, and then Estimates and Other Taxes Paid. In that section, you can indicate if you want the credit or itemized deduction.
Once in the routine, you will need to report the foreign income associated with the foreign taxes paid:
Your foreign tax credit will be limited to your US tax on foreign income in the current year. Any unused credit will be carried over to future years. You can see the amount of your foreign tax credit on line 1 of schedule 3 of your form 1040.
To view your form 1040 and schedule 1 to 3:
- Choose Tax Tools from your left menu bar in TurboTax Online
- Choose Tools
- Choose View Tax Summary
- See the Preview my 1040 option in the left menu bar and click on it
- Choose the Back option in the left menu bar when you are done
