topic Foreign Tax Credit Carryovers in Deductions & credits

Foreign Tax Credit Carryovers

kevinbaker2275 — Sun, 09 Feb 2020 05:21:08 GMT

I am new to Turbotax. My prior tax returns were done by a CPA who I am no longer able to afford. In the last tax return, it appears I had a Foreign Tax Credit of $6,750. This is noted in the "Foreign Tax Foreign Tax Credit Carryover Utilization Worksheet". I have a couple of questions: (1) What is the Foreign Tax Credit and how can I use it?; (2) Do Foreign Tax Credit's expire?; (3) If I don't use it for the next year, can I use it in a subsequent year? Thank you!

Re: Foreign Tax Credit Carryovers

KarenJ2 — Sun, 09 Feb 2020 15:23:45 GMT

1. If you paid or accrued foreign taxes to a foreign country or U.S. possession and are subject to U.S. tax on the same income, you may be able to take either a credit or an itemized deduction for those taxes. Foreign tax credit is used to offset double taxation.

2. If you can't claim a credit for the full amount of qualified foreign income taxes you paid or accrued in the year, you're allowed a carryback and/or carryover of the unused foreign income tax. You can carry back for one year and then carry forward for 10 years the unused foreign tax. For more information on this topic (including taxes paid or accrued in years before 2007), see Publication 514, Foreign Tax Credit for Individuals.

3. Yes, if you do not use your foreign tax credit carry forward this year, you can use it in the next 9 years if you have foreign earned income (foreign business trips, for example).

Re: Foreign Tax Credit Carryovers

MBurroughes — Sat, 07 Mar 2020 17:28:17 GMT

My error message is (Form 116 Comp Works) Foreign Tax Credit Wks- Total incoming C/O should not have a value Include this amount on the first copy of this category of income?

Huh? a $39 value appears on line 10 (Part III Foreign Tax Computation and then lower on the Foreign Tax Credit Carryovers. No idea where it come from nor how to "include this amount on the first copy of this category of income. For $39 I'd delete but cannot determine either how to or how to "fix"

Re: Foreign Tax Credit Carryovers

LinaJ2020 — Fri, 13 Mar 2020 16:35:05 GMT

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@MBurroughes

Re: Foreign Tax Credit Carryovers

svillareal1 — Wed, 22 Apr 2020 16:52:53 GMT

I moved back to US mid-2018, applying some of my FTC (foreign tax credit) with a carryover balance. Now in 2019 tax year, my tax residence is US and no longer get paid (wages) abroad. However, i do have a 1 week business trip abroad and i have seen this can be considered foreign-sourced income that can release some of the FTC carryover balance. I completed form 1116, with general income in 1a as business trip income; calculating this by breaking my salary over that period. This ultimately give a positive value on line 21 (form 116) for max amount of credit allowed and Part IV L33 shows the same FTC credit value. My tax amount due is reduced accordingly. This seems good, but I notice that FTC carryover sheet still shows zero in 2019 (foreign taxes, Disallowed, Utilized, Carry Over). But the final line, Carryover to 2020 shows the subtracted amount reported on line 33 (form 1116). If i right click on the zero, and click Data Source, i points me to the cell that in L33 (form 1116) which is the carryover amount.

Questions

1 - are i correct in subtracting a business trip in this way to release some FTC carryover?

2 - is there a bug that is not updating the 2019 FTC carryover utilization and reporting.

Re: Foreign Tax Credit Carryovers

sfviolins — Tue, 12 May 2020 00:07:56 GMT

Hi!

I moved back to the US in 2017. If I have carried over foreign passive income credit on foreign taxes from an earlier year and I’m taxed this year by the IRS on foreign capital gains that I was not taxed on by the source country (Canada) due to a tax treaty, can I claim the carried over credit amount? Basically, am I allowed to fill out a form 1116 that has a $0 amount in Part II? @KarenJ2

Re: Foreign Tax Credit Carryovers

rayeng — Thu, 01 Oct 2020 21:20:44 GMT

If I have a carry over( ex.200$) for 2018 and I f I do not want to input ( and skip) the figure (in Line 10 ) of F1116 in 2019 return,can I still claim the again ( line 10) F1116 in 2020 return?

since I have not provided this carry over info' input in 2019 F1116 line 10, do I Iose this benefit of imputting in 2020 return(form F1116 line 10) and once for all forego this 200$ carry over benefit.

(It is not clear from instructions of line 10 F1116 and where general info' says if you do not file form F1116 you lose using carry over but I I will be Filing F1116 for 2019 but not using carry over --since Credit allowed will be zero for 2019 any way).

Thanks for any clarification

Re: Foreign Tax Credit Carryovers

Anonymous — Fri, 02 Oct 2020 04:35:27 GMT

what's so hard about entering one number? I don't think anyone can say for sure whether the IRS would raise a question when you file 2020 entering the 2018 carryover when you entered nothing in the 2019 return. what happens if you can't use it in that year? current year FTC's are used before carryovers. if the IRS does raise an issue then you may be required to file an amended return.

to be brutally honest over the years I've have worked on hundreds of returns with FTC carryovers. I can remember only a few where they ever got to use any of the carryovers. In my experience, 99% expire without ever being used.

Re: Foreign Tax Credit Carryovers

rayeng — Sat, 03 Oct 2020 19:12:32 GMT

Thank you so much for your answer.

The other main concern I had was that for this year - 2020, I don't have any foreign income so I don't need to file Form 1116 with my tax return. In such circumstance, when the foreign income and taxes are $0 do I still need to file the form 1116 with just line 10 (for carryovers balance ) or fill out any other type of statement?

Eagerly waiting for your advice..

Thank you again,

Re: Foreign Tax Credit Carryovers

SivaTTax — Sun, 21 Mar 2021 19:27:51 GMT

I have foreign tax credit from previous years. For the current year, I have foreign income that i am reporting and including US tax, however I paid less tax in that foreign country. Turbotax still does not take the previous year's unused tax credit to enable to me take full tax credit against what I am paying as tax for the foreign income . The column has 0 values although I have entered the used credit amounts in the right places - it shows the right amt as unused but shows 0 as carry over amount to be used for current year. Any help on how to fix it would be great.

Re: Foreign Tax Credit Carryovers

feiwenw66563 — Sun, 02 May 2021 02:25:46 GMT

I have foreign tax carry over amount from last year. Which line of amount i should use from Form 1116:

Regular section: Line 9: Foreign Tax or Excess Limit Remaining

AMT section: : Line 9: Total Foreign Taxes from all available year to be carried to next year

Re: Foreign Tax Credit Carryovers

SivaTTax — Sun, 02 May 2021 18:21:39 GMT

Line 10 F1116 for all category

Re: Foreign Tax Credit Carryovers

feiwenw66563 — Sun, 02 May 2021 23:52:09 GMT

Form 1116 Line 10 is blank, but the foreign carry over statement shows $3000 for next year.

Re: Foreign Tax Credit Carryovers

DaveF1006 — Wed, 05 May 2021 19:27:30 GMT

It means you were not able to claim the non-refundable portion of your Foreign Tax Credit for this year because there was not enough tax liability to take full advantage of the credit.

Re: Foreign Tax Credit Carryovers

rmbu — Wed, 13 Oct 2021 08:45:41 GMT

On form1116 line 33, I have smaller number than on line 32, which means I should have more Foreign Tax Credit than total tax amount this year, so should have excessive FTC. However, in TurboTax "foreign tax credit carryovers to 2021" worksheet, I see it utilized all the foreign tax for 2020 and there's 0 carryover to 2021. How can that be the case?

Re: Foreign Tax Credit Carryovers

roniasa10 — Mon, 07 Mar 2022 02:59:40 GMT

In my Tax return for 2020 under "Foreign Tax Credit Carryovers to 2021" table i have

- $0 carryover in 2020

- Total carryover of $5200 to 2021

While working on Taxes for 2021, after importing the data from 2020, I am getting this error on 1116 ws form:

" Total C/O has a value. This will require form 1116, Schedule B, which will be available on future product updates" .

I have filled form 1116 and Schedule B for 2021.

Any thoughts on how this can be fixed would be much appreciated. Thanks!

Thanks

Re: Foreign Tax Credit Carryovers

agreber — Thu, 14 Apr 2022 02:15:27 GMT

@roniasa10 In case you're still needing help with this issue, you should know that Form 1116, Schedule B (aka Foreign Tax Carryover Reconciliation Schedule) is a separate form and is used to reconcile your prior year foreign tax carryover with your current year foreign tax carryover. It' not the same thing as either Form 1116 or Schedule B.

Here is a link to the instructions for Form 1116, Schedule B: https://www.irs.gov/pub/irs-pdf/i1116sb.pdf

And here is the link for the form, itself: https://www.irs.gov/pub/irs-pdf/f1116sb.pdf

Hope this helps you make sense of things (if you haven't already).

Re: Foreign Tax Credit Carryovers

NV TAX 22 — Tue, 21 Mar 2023 00:54:41 GMT

I have a carryover foreign tax from 2021 and it shows up in PART III (1116) line 10 as carryover to the current year (2022). Also shows on line 14 as a foreign tax available for credit.( I do not have any foreign income in 2022). However, the credit never gets transferred to 1040 as a reduction of my taxes, what is going on?

Re: Foreign Tax Credit Carryovers

HopeS — Tue, 21 Mar 2023 16:21:11 GMT

This could mean that you did not have enough tax liability to take benefit of the foreign tax credit carryover. If you paid higher foreign taxes on a lower US income, you may not be able to take 100% of the credit. TurboTax will tell you that you’ll have to wait until next year to take a portion of the credit.

Below is the General rule:

The foreign tax credit can offer taxpayers relief from double-taxation in certain cases where a foreign government taxes income that would also be taxed in the United States. The amount that qualifies for the tax credit can reduce your U.S. tax liability on a dollar-for-dollar basis.

In general, the tax credit can lower your tax liability in the United States, but only up to the amount of foreign taxes paid or the U.S. tax liability on the foreign income — whichever is lower.
If your foreign tax liability is higher, you may be able to carry the difference back to the previous year or forward to future years.

You can take the amount paid as a Credit or as an itemized deduction if you are filing Schedule A.

Both the credit and the deduction are entered in the same place. Here's what you do:

Open (continue) your return in TurboTax
Make sure you've already entered all your foreign income. If you still need to enter it, do that now
Select Search and search for the foreign tax credit. Select the Jump to link in the search results
When you reach the screen Do You Want the Deduction or the Credit? select the option you prefer for your situation

See the Links below for more detailed information and instructions:

Foreign Tax Credit

Claiming Foreign Tax

@NV TAX 22