topic Re: Form 1116 line 18 negative number should be zero in Retirement tax questions

Form 1116 line 18 negative number should be zero

dhuberl2025 — Fri, 27 Mar 2026 15:55:12 GMT

TurboTax Deluxe Desktop 2025 (Windows)
WinPerRelease: 025.000.0284

TurboTax Deluxe Desktop 2025 incorrectly allows a negative value on Form 1116 line 18. Per IRS 2025 instructions, when using the Line 18 Adjustment Exception, line 18 must equal Form 1040 taxable income (line 15), but not less than zero. TurboTax instead carries the negative taxable income directly to line 18.

I'm a foreign resident, and my return with FEIE (Form 2555) has negative taxable income.
I have some foreign interest on which I paid foreign tax.

After entering info for foreign tax credit requiring Form 1116 (passive category), line 18 gets generated with an amount equal to the standard deduction subtracted from AGI, which is a negative number.
The IRS instructions state that this should not be less than zero.

I have no schedule 1A.
I qualify for Line 18 Adjustment Exception.

Re: Form 1116 line 18 negative number should be zero

dhuberl2025 — Fri, 27 Mar 2026 16:03:05 GMT

My question (which I failed to include in the post, sorry), is if there is something different this year that I need to do in order for this to be generated as expected?
I understand that the IRS updated their instructions for line 18 for 2025, but as far as I can see this should still be zero in my case.
I've uploaded a diagnostic file via"send tax file to agent" but I don't see any way to better report if this is a bug.

Re: Form 1116 line 18 negative number should be zero

DaveF1006 — Wed, 01 Apr 2026 15:02:47 GMT

To clarify, what is the token number generated from the diagnostic file you uploaded?

Re: Form 1116 line 18 negative number should be zero

dhuberl2025 — Wed, 01 Apr 2026 16:12:33 GMT

token number 3554853-22935639 [restored]

Re: Form 1116 line 18 negative number should be zero

DaveF1006 — Wed, 01 Apr 2026 20:15:42 GMT

I viewed your diagnostic. Although a negative amount of -25,565 is reported in line 18, it won't make a difference because Form 1116 is not required to be filed this year because your foreign tax credit was less than $300 for the year. In fact, it isn't included as a form in your return, or shouldn't be anyway.

Since you have no tax liability listed in Line 18, of your 1040, you could not utilize the tax credit this year so it is shown as a 2025 carryover on 1116 Comp Worksheet, which is a form in your return.

I would suggest ignoring this for this year. Whether Line 18 be 0 or negative number, it doesn't make a difference.

Re: Form 1116 line 18 negative number should be zero

dhuberl2025 — Thu, 02 Apr 2026 11:56:21 GMT

Many Thanks!
Will excluding form 1116 this year impact my ability for this (and prior years) passive carryovers to be carried forward for use in future returns?
(In prior years,form 1116 has nonetheless been included for similar passive category foreign tax credit amounts of under $300.)

Re: Form 1116 line 18 negative number should be zero

DaveF1006 — Fri, 03 Apr 2026 19:53:54 GMT

If you choose to claim the Foreign Tax Credit without filing Form 1116, you cannot carry forward any unused foreign taxes from this year to future years. However, your existing carryovers from prior years are generally not "lost" or forfeited; they simply sit on the sidelines for the year, but they cannot be used or updated on this year's return.