How can Line 10 Form 1116 errors be avoided?
My 2020 error message on Form 1116 is related to passive income and the related Worksheet which states: “Line 10 should not have a value. Include this amount on the first copy of this category of income” However this is the only Form 1116 form which is Passive and TurboTax has themselves marked this copy as “Copy1'
The same error message on Form 1116 relates to Alternate Minimum Tax for passive income and the related Worksheet which states: “Line 10 AMT carryover credit should not have a value. Include this amount on the first copy of this category of income” However this is the only AMT passive copy and TurboTax has themselves marked this copy as “Copy1'
The above 2020 TurboTax errors are stopping a simple E File and forcing manual filing.
I do not show any 2020 wage income or any carry forward tax credits for wages so I have not used Wages Form 1116 this year 2020 only the Form 1116 for Passive income.
In prior years I prepared Form 1116 using Intuit ProSeries through my now closed tax accounting business without any Form 1116 errors in exactly the same way as I did as above for 2020 Turbotax.
How can these 2020 TurboTax Form 1116 Line 10 errors be eliminated so as to allow E Filing the 2020 1040?
In response to the discussion titled: "Form 1116 Errors in 2020 TT” posted by Davo-1008
I have found the Solution to Form 1116 Line 10 Carry Forward Tax Credit Errors.
In my case accumulated carry forward tax credits from prior years were primarily created due to higher taxes paid in a foreign country than were payable in the USA. Income and taxes paid in USA and a Foreign country( Australia) was properly apportioned between earned and passive income using the benefits of the existing double tax treaty.
The steps to this Form 1116 error solution to pick up Passive carry forward tax credits are:
a) Save a print copy of your existing Form 1116(s) so you can later copy and paste the content
b) Delete all your existing Form 1116 and related worksheets and explanations
c) Save your Turbo Tax File without any Form 1116
c) Use the Turbo Tax Program itself to create Form 1116 at Box 6 (b) of 1 of your Form 1099-INT
worksheets and label the top right box of this new Form 1116 “PASSIVE”.
d) Then repeat the linking to this same Passive Worksheet by double licking all your remaining Schedule B 1099 Interest worksheets for all bank accounts existing in foreign countries only.
e) Complete the Passive Foreign Tax Credit Computation Worksheet (labelled by Turbo Tax as “1116 Comp Worksheets” especially with detailed calculations shown in Part II ( q) interest where you double click the box in order to show you detailed calculation allocating the correct proportionate share of Net Taxes Paid ( Taxes Paid less tax Refunds received globally) compared to the source of income earned versus passive.
f) At the base of the Passive Foreign Tax Credit Computation Worksheet carefully fill in all your prior year foreign tax credit carryovers in the top 2 sections including the AMT amounts.
g) In 2020 the Passive Foreign Tax Credit Carryovers to 2021 should automatically fill themselves
h) Be sure the Form 1116 Passive Part II explanations are completed.
Conclusion: There should be no remaining Form 1116 errors in TurboTax especially at Line 10 and on the worksheet carry forward credit subtotals.