topic Can passive foreign interest carryover credit (from table 1116) be used against general tax liability? in Get your taxes done using TurboTax

Can passive foreign interest carryover credit (from table 1116) be used against general tax liability?

laurag25 — Tue, 24 Feb 2026 17:37:24 GMT

I gather from the discussions here (and Google AI) that the carryover credit can only be used against the same category of income.

Say I have a 10-year history of carryover credits from foreign tax paid on RIC/Various mutual funds.

Can I apply a certain year's (by my choice from any of these 10 years) carryover to my current tax liability on this year's mutual funds' DIV income?

Re: Can passive foreign interest carryover credit (from table 1116) be used against general tax l...

DaveF1006 — Tue, 24 Feb 2026 22:04:41 GMT

No, you do not have a choice of which year to use in your carryover history. The IRS requires a strict chronological order for carryovers. You must use the oldest available credits first.

26 U.S. Code § 904 - Limitation on credit (look under the heading Carryback and carryover of excess tax paid)

Re: Can passive foreign interest carryover credit (from table 1116) be used against general tax l...

laurag25 — Tue, 24 Feb 2026 22:35:34 GMT

thank you, this is very helpful.

I do have one year where the carryover was 0. If I use my carryover credits sequentially for years up to that entry, does it mean for the "0 year" I would designate that year's as the one to use (and it would have zero effect on mly return), and then the subsequent year proceed to the next?

Re: Can passive foreign interest carryover credit (from table 1116) be used against general tax l...

DaveF1006 — Wed, 25 Feb 2026 02:23:27 GMT

No, TurboTax automatically uses the FIFO(first-in-first-out) method for determining what carryback amount to use. If a year has a zero carryover, TurboTax will automatically skip that year and grab the next available dollar from the subsequent year in the table.

In this case, TurboTax will designate what year to use. You wouldn't make that determination on your own.