Turbotax computes gross income for foreign tax credit purposes wrong
Using Turbotax 2025 Premier Desktop. I have what I think is a relatively straightforward case of passive dividend income from a mutual fund with foreign tax paid.
Due to a previous year selection, I cannot use the simplified method, but even though there are no adjustments when clicking through the various Turbotax screens.
When checking the computation afterwards, I see Turbotax is inflating the gross income which is used in a denominator to calculate a limit of how much of the foreign tax paid can be claimed as a credit.
When I go to the form, 1116, I right click on the cell for Gross income and choose "Data Source". It shows me what it used to calculate it (see it below). I don't have schedules C, E, F, K-1, K-3. So again, the calculation should be really straightforward: The items from forms 1040, Schedule 1, and Schedule D. Except that I get a number significantly lower than Turbotax.
I've checked this quite extensively, cross checked with previous posts (foreign tax section appears to be quite problematic), and at this point this appears to be a bug in Turbotax. Could someone please take a look?
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Form 1116 (COPY 1) : Line 3ea
Calculated Gross income from all sources:
This is total income before deductions and is the sum of:
Form 1040, lines 1, 2b, 3b, 4b, 5b and 6b plus
Schedule 1 (Form 1040), line 1 plus
Schedule 1 (Form 1040), line 2a plus
Schedule C, line 7 (all copies) plus
All gains reported on Schedule D minus Schedule D, line 11, Subtotal Line A(Form 4797, Gain from Part I) plus
All gains reported on Form 4797 plus
Schedule E, line 3 total plus line 4 total plus
Schedule K-1 Worksheet - Estates and Trusts, Box 14 Code B : Foreign Tax Information section, line 7 (if it has a value); otherwise income reported in Part III lines 5, 6, 7 and 8 plus
Schedule K-3 - Partnerships Line B - Gross income from all sources
Schedule K-1 - Partnership Additional Information page 1, Box 11 section,Code A, line 1 (if positive) and line 3 and line 4 and Code I, line 5
Schedule K-3 - S Corporations Line B - Gross income from all sources
Schedule K-1 - S Corporation Additional Information page 1, Box 10 section, Code A, line 1 (if positive) and line 3 and line 4 and Code H, line 5
Schedule F, line 11 (all copies) plus
Form 4835, line 7 ( all copies) plus
Schedule 1 (Form 1040), line 7 plus
All positive income amounts on the Other Income Statement.
