DianeW777 (Expert)
You are right about the online IRS instructions for the K-1 not listing anything for box 14 code B but the back of my Trust Fund's Schedule K-1 does list instructions for Box 14 Code B (foreign taxes). Not sure why the discrepancy.
My Trust fund K-1 foreign tax is less than $300 and several other threads have accurately reported that you can skip the more complicated forms 1116 or form Schedule A Line 6 and just enter the foreign tax as a simple deduction on form Schedule 3 (form 1040) Line 1 if your foreign taxes are less than $300 (filing single) or $600 (married filing jointly). Unfortunately, I have yet to figure out how to get TurboTax to do that. It wants to push the whole journey of form 1116 or Schedule A even for filers below the 300/600 threshold. It would be nice if TurboTax software would simply bypass the very complex path for form 1116 or Schedule A if the filer enters foreign tax below the $300/600 thresholds. Other filers have posted how complex the K-1 entry can get. Anything TurboTax could do to help simplify this would be great. I have read so many frustrating posts on the Foreign Tax Deduction or Credit. It has to be one of the most complicated things for us non-pro types to deal with.
TurboTax help states that you don't have to fill out form 1116 to take the foreign tax deduction if I am below the $300 (single) foreign tax paid threshold, but it doesn't tell me how to skip the form 1116. I have tried to step through and enter my $2 foreign tax but TT does not generate a Schedule 3 with my $2 entry. Need someone to explain what I might be missing here.
In some years, my foreign tax reported on the K-1 was as low as $2 and the trouble to enter it was so hard for me that I just didn't report it on TurboTax. I never got a complaint for the IRS most likely because the error is against me (I don't get a deduction or credit) but I am willing to lose a few dollars credit or deduction rather than struggle through the complex step-by-step questions in TurboTax. If it was a situation where the foreign tax meant I owed more money to the IRS, I would have to fill it out, but it is my loss, the IRS gain, so I am inclined to skip it unless TurboTax could help simplify the process.
I am wondering if I could enter the $2 of foreign tax manually in the Schedule 3 1040 Line 1 foreign tax deduction or would it throw an error? I use desktop TurboTax.
