topic Re: Form 1116 in Deductions & credits

Form 1116

juham2013 — Thu, 06 Mar 2025 17:13:07 GMT

Hi,

Is there a video that specifically provides a view of the interview process to fill out Form 1116 using TurboTax? There are many, but they are for mailing in paper returns, not using software such as TT.

I tried to manually fill in form 1116 this morning by going to the "Forms" view, but it really doesn't seem very straightforward. All other data (W2 income, INT,DIV, and capital gains) has been plugged into the Desktop version of TT Home & Business already. Filing Married Jointly.

Can I assume that I do NOT need modify or fill in 1040 Form and just focus on Form 1116 at this stage and TT takes care of the rest?

Cheers!

Re: Form 1116

LindaS5247 — Thu, 06 Mar 2025 17:47:40 GMT

Yes, you can be confident that TurboTax will ask you straightforward questions about your foreign income, determine how much of it is deductible (or available as a credit), and properly fill in all the right forms for you.

We don't have a TurboTax generated video for filling out Form 1116, but there are sites that share videos for users of TurboTax that could be helpful.

If you are using TurboTax Live, you can easily connect with a tax expert: You can do this by selecting Live help button. Select Connect with live help at the top of the chat window. Enter your tax question or tax topic area and select Continue.

Click here for "Claiming the Foreign Tax Credit with Form 1116"

Click here for "Where do I enter the foreign tax credit (Form 1116) or deduction?"

Re: Form 1116

juham2013 — Thu, 06 Mar 2025 19:05:09 GMT

With regard to filling out Form 1116,

1. Enter all your foreign income in the Wages & Income section if you haven't already

The above made me hit a brick-wall. Entering foreign income and then going into 1116 actually increased my tax liability here in the U.S. and it clearly needs to be opposite, given the significant taxes I paid.

The problem is really where to properly enter the foreign income. I have spoken with 3 TT Tax Advisors already.

Re: Form 1116

juham2013 — Thu, 06 Mar 2025 19:07:31 GMT

Also, the links mentions Americans living abroad. I don't and the income is passive income, based on employment history in that foreign income.

Re: Form 1116

juham2013 — Thu, 06 Mar 2025 19:15:04 GMT

It also says (TurboTax site you linked)

There are also some taxes that cannot be included in the FTC:

Social Security taxes paid or accrued to a foreign country with which the U.S. has a Social Security agreement (this is my case)

So, I can't use Form 1116 to report taxes paid and if that is true, why would I report income from a foreign country? If I do - without getting a tax credit - I would pay DOUBLE tax.

Re: Form 1116

ThomasM125 — Thu, 06 Mar 2025 19:33:17 GMT

If your only foreign taxes are social security taxes that don't qualify for a foreign tax credit, then you don't need to bother with the Form 1116 or foreign taxes.

When you work through the foreign tax section, you assign your foreign income to whatever country it is from and you enter the foreign tax paid to that country. Doing so does not add that income to your taxable income. If you need to add foreign income that is not already reported on your tax return, you do that in the Wages and Income section, then Less Common Income, then Foreign Earned Income and Exclusion. You will see a screen there where you enter your Foreign Earned Wages, I believed you may have made an entry there in error:

Re: Form 1116

juham2013 — Thu, 06 Mar 2025 19:58:14 GMT

Hi ThomasM125!

I appreciate your response.

By "If your only foreign taxes are social security taxes that don't qualify for a foreign tax credit...." are you saying that those Taxes do NOT qualify for FTC?

I know that based on the Bi-lateral Tax Treaty between my country of birth and the U.S., the only taxing authority on that social security income from that foreign country is that government.

Where it says "Foreign Earned Wages" doesn't seem right as I did not earn any foreign wages but passive income in the form of social security payments.

I also looked at Form 8833 (not supported by TT). "Treaty-Based Return Position Disclosure"

https://www.irs.gov/pub/irs-pdf/f8833.pdf

Positions (Page 3) for which reporting is waived include, but are not limited to, the
following. See Regulations section 301.6114-1(c) for other waivers from
reporting.
• That a treaty reduces or modifies the
taxation of income derived by an
individual from dependent personal
services, pensions, annuities, social
security, and other public pensions, as
well as income derived by artists,
athletes, students, trainees, or teachers;
• That a Social Security Totalization
Agreement or Diplomatic or Consular
Agreement reduces or modifies the
income of a taxpayer;
..........

The above would apply in my case and would seem to suggest what you are saying would work.

Cheers,

Re: Form 1116

juham2013 — Thu, 06 Mar 2025 20:09:24 GMT

When I was talking to a TT Tax expert on the phone this morning she suggested I try the "Foreign Earned Income and Exclusion: section. Result was that my Federal Taxes went up dramatically.

The 2nd screen after choosing that option produced the one below. None of those boxes appear to apply in my case, getting social security benefits.

Re: Form 1116

ThomasM125 — Thu, 06 Mar 2025 20:45:33 GMT

I was referring to your comment that foreign taxes associated with social security benefits were not be eligible for the foreign tax credit if there was a treaty:

I haven't research the matter, but from what you posted, it appears that the foreign tax credit would not apply to you, and if so you don't need to enter anything regarding it on your tax return. I imagine this has to do with the treaty that gives you a benefit, so you don't get an additional benefit in the form of a tax credit.

Re: Form 1116

juham2013 — Thu, 06 Mar 2025 22:52:52 GMT

Hi,

Thank you so much for putting up with my "rambling" verbiage!

SusanY1 commented on my, yet, other post to the effect that my foreign pension would not go on Form 1040, but I could still use FTC (1116 Form) to report the income that way and also taxes paid......

Sincerely,

Re: Form 1116

SusanY1 — Thu, 06 Mar 2025 22:58:47 GMT

JJ, you DO put the pension on 1040 and then again enter it on the 1116. Let us know as you work through those sections if you need help. Because foreign income can be any kind of income, there isn't a clear way to "link" it to the 1116 except when it is on dividends.

Therefore, you do enter it wherever it normally goes (either 1099-R area or Miscellaneous for you) which will put it on 1040. Then again on the 1116 to tell the program the income amount that is tied to your credit (and when you enter it this second time it won't go on the 1040 a second time)

Re: Form 1116

juham2013 — Fri, 07 Mar 2025 14:15:08 GMT

Good morning SusanY1,

Under which sub-category does the foreign pension go under "Miscellaneous"? There are many alternatives there.

The interview process brings up 1099 again or W2 when I selected the 1st category and those are not applicable. The sub-category that says "Other reportable income" also asks questions and presents alternatives that are not applicable in my situation.

Re: Form 1116

juham2013 — Fri, 07 Mar 2025 14:29:17 GMT

SusanY1,

A TT webpage also says the following (see below).

Link to URL page here: https://turbotax.intuit.com/tax-tips/military/filing-irs-form-1116-to-claim-the-foreign-tax-credit/L2ODfqp89

I may have the semantics wrong as I paid taxes on Social Security income, so those taxes CAN be included in the TFC.

Still, I haven't had success entering the income as interview process asks questions that aren't relevant.

Re: Form 1116

juham2013 — Fri, 07 Mar 2025 14:41:55 GMT

Never had to use the "Forms view" before but would the foreign earned social security (pension) be entered at 5a and then put 0 in the Taxable amount field? The IRS can't tax this income as by tax-treaty. If my thinking is correct, I assume that I will then claim FTC on Form 1116 so that I am not getting taxed by the IRS on income I paid a heavy tax already.

Re: Form 1116

DaveF1006 — Fri, 07 Mar 2025 15:04:25 GMT

It depends. If a tax treaty specifies that your Social Security benefits are only taxable by your foreign country of residence, you generally don't owe US taxes on those benefits. However, you are still required to report the income on your US tax return.

Even if the income is exempt from U.S. taxation under a treaty, the IRS requires you to disclose it on your tax return. You can then claim the treaty exemption to avoid double taxation.

Here is how to report and then exempt under the treaty exemption.

Log into your account
Select Wages and income
Less Common income
Miscellaneous Income, 1099-A, 1099>start
Scroll to the bottom of the page to Other Reportable Income
Other taxable income, answer yes
Then give a brief description of the income and the amount listed. Here call this Social Security benefit from XXXX (the name of the country) and the amount
After this entry is made, select add Add Miscellaneous Income Item .
Here, type Treaty Based Social Security income Exclusion as a description. Enter the amount entered above as a negative number with a minus sign in front of the amount.

Leave this out of Form 1116 as you won't be claiming a foreign tax credit since it won't be taxable US income.

@juham2013

Re: Form 1116

juham2013 — Fri, 07 Mar 2025 15:26:03 GMT

Good morning DaveF1006!

I value your suggestion. My country of residence is the U.S. and has been for over 20 years continuously. Being a dual-citizen of the U.S. and my country of birth.

The way you described will make it possible for me to report the foreign earned social security to the IRS as income which is what I like and, by law, all income from all sources must be reported to the IRS. My modest social security was taxed heavily at 17.5% rate too and given that it was a modest sum shouldn't increase my overall taxes here in the U.S. (filing married jointly). I also have, from the foreign Payor, a document called "Certificate of Income" which clearly states the amount and also the taxes already paid in tax-year 2024.

Cheers,

Re: Form 1116

juham2013 — Fri, 07 Mar 2025 16:09:25 GMT

DavidF1006,

When doing it the way you described I am presented with a "weird" question (I ran the Analysis on the return), See below:

Neither I nor my spouse are students and if there is "No entry", won't there be a problem in future?

Re: Form 1116

TaxHacks — Sun, 15 Mar 2026 10:27:41 GMT

"The problem is really where to properly enter the foreign income. "

If using forms, I believe that you compute the number, and enter that into "1116 Comp Wks: line 1c in the appropriate column.

This is working for me down through form 1116 line 8. My problem is getting from line 8 to line 9, which seems like an odd place to stop getting the numbers. Form 1116 with Premier will not propagate line 8 to line 9.

Re: Form 1116

DaveF1006 — Mon, 16 Mar 2026 12:53:08 GMT

TurboTax uses a master Foreign Tax Credit Worksheet to feed the 1116.

Open the Foreign Tax Credit Wks (look for the one named for your specific country or "Various").
Scroll down to Part II: Foreign Taxes Paid or Accrued.
Ensure the Date Paid/Accrued is entered. TurboTax often refuses to calculate Line 9 if the date is missing, even if the dollar amount is there. Also make sure the checkmark is checked indicating the taxes were paid.
Verify that the Type of Income selected on this worksheet matches the category you checked on the top of Form 1116.

@TaxHacks

Re: Form 1116

TaxHacks — Mon, 16 Mar 2026 19:41:50 GMT

Thanks. It was worth checking. I had saved a copy of my *.txf2025 file where I had the problem. I opened that, and confirmed that Part II showed 12/31/2025 in the Date column for Country A. At the time I was having the problem I also made sure that the date was a time in 2025. I also confirmed that box c (Passive category income) was selected. It would have been nice to understand why I had the problem. I will now return to my later *.txf2025 file.

It was also good to see that somebody had read my post. When entering the post I had somehow clicked something that triggered positing before I had selected I was using Windows. I know a lot of people filter reading.

I hope if somebody else runs into the problem, my solution works for them if another does not.