topic Foreign Tax credit - Form 1116 in Investors & landlords

Foreign Tax credit - Form 1116

Earniep — Fri, 19 Mar 2021 13:29:43 GMT

When running Smart Check, TT asks me to check

Form 1116 - Foreign Tax Credit Comp Wks - Paid/Accrued boxes must be entered.

It gives me these choices:

No entry

Method: Paid

Method: Accrued

The only Foreign tax I have is $6.00 for mutual fund dividend. That amount is already entered on the 1099-Div form.

I didn't have this problem last year when I had similar situation.

I'm not sure which to check. Is it the Method: paid?

Thanks

Re: Foreign Tax credit - Form 1116

LinaJ2020 — Fri, 19 Mar 2021 21:47:01 GMT

I will suggest you to check the option "Paid".

If you have paid taxes to both foreign and the US tax authorities including taxes paid on your mutual fund, the IRS allows you to claim a foreign tax credit on your US tax return. To claim this foreign tax credit, you would need to file a Form 1116 Foreign Tax Credit. The credit will show on Schedule 3 line 1 and line 20 on Form 1040.

Re: Foreign Tax credit - Form 1116

Earniep — Fri, 19 Mar 2021 22:27:28 GMT

Thank you. That's what I thought, but wanted to make sure.

Re: Foreign Tax credit - Form 1116

LinaJ2020 — Sat, 20 Mar 2021 01:43:01 GMT

You are welcome!

Re: Foreign Tax credit - Form 1116

GMHansen — Sun, 16 May 2021 02:37:01 GMT

Use paid since this amount was taken from the dividends you received.

Re: Foreign Tax credit - Form 1116

atgtazmd — Sun, 30 May 2021 01:05:18 GMT

I am currently working in Puerto Rico with the Department of Defense. I have taxes taken out for Puerto Rico as I am trying to complete my federal income tax and trying to do Form 1116. It asks me if I want to do a deduction or credit. Which should I pick? And where do I place the income that I earned and the tax that I paid?