PK -
I agree that we have established that Turbo Tax correctly determines the foreign tax credit one is eligible for using form 1116. However, I do not agree with two of the assertions in your responses.
Assertion #1. You claim in your response to my initial email query that "sometimes it is better to claim only the safe harbor amount of US$600 for MFJ filer." IRS publication 514, Foreign Tax Credit for Individuals, clearly states on page 41 under the heading Form 1116 "you must file form 1116 to claim Foreign Tax Credit unless you meet one of the following exceptions," followed by the exceptions I have discussed with you in a previous post. Nowhere does it suggest, affirm, recommend or allow the taxpayer the option of claiming only US$600 when the amount of foreign tax paid exceeds that amount. This tactic seems to be what you are advising and claiming to be a foreign tax credit safe harbor.
In addition, if you go to google and type in "safe harbor for payment of income taxes", it correctly describes the conditions that would allow you to underpay without penalty, commonly understood to be a safe harbor, to wit, 100% of last year's taxes due or 90% of current taxes due.
If, however, you google "safe harbor for foreign taxes", you get no such description, to wit, you can enter US$600 as foreign tax paid on your income tax return even if your 1099-DIV line7 shows an amount greater than US$600 in order to avoid filing form 1116. Instead, what google shows is simply the IRS instructions for form 1116.
Therefore, I think there is no such safe harbor provision for foreign taxes paid, as you claim. If you continue to insist that such a "safe harbor"exists, you are going to have to direct me to the IRS form or publication or other tax authority that supports that.
Assertion #2. In your last post to me, you say: "(b) Turbo does not warn you about the safe harbor, because it assumes that the taxpayer knows and needs to choose the amount of Credit/Deduction. " This (b) was in response to my comment saying "I find it odd that Turbo Tax does not give filers who have a de minimis amount of foreign taxes paid over $600 the suggestion to not enter the actual amount but only the $600 amount to avoid filing form 1116."
TurboTax has no basis to assume that the taxpayer knows about the so-called "safe harbor." Also, if my memory serves correctly, Turbo Tax gives the taxpayer options in several different circumstances, for example, as to whether to take the standard deduction or to itemize. If you elect to fill in the Schedule A worksheet, it will calculate your tax based on which is more favorable. Another example is the foreign tax credit worksheet itself, where it gives you the option of whether to claim the credit or take the credit as a deduction.
Therefore, if this foreign tax credit safe harbor exists as you define it, I can think of no reason why that could not be one of your options in the foreign tax credit worksheet regardless of what you say in (b). I thought the whole point of Turbo Tax was to allow the taxpayer to pay the least amount of taxes legally required.
