2021 Form 1116 Line 18 not calculating correctly

[mross17]

Per the Federal Form 1116 Instructions - pages 21 and 22 - Individuals who completed the Qualified Dividends and Capital Gain Tax Worksheet (QDCGTW) , which I did, you MUST USE (REQUIRED TO USE) the Worksheet for Line 18 (page 21 of form instructions) to figure the amount to enter on line 18 if: 1. Line 5 of QDCGTW is > 0, and 2. Line 23 of QDCGTW is < line 24 of that worksheet. I meet the requirements to use worksheet for line 18. Using the worksheet manually I came up with a lower amount for line 18 which increases the percentage on line 19 and the maximum amount of credit on line 21 is larger. TurboTax is using 1040, line 15 on line 18 which it shouldn't be in my case. 

[rogge1722]

Did you verify that you exceeded the threshold whereby you could not use the adjustment exceptions?  FYI TT will not make adjustments if optional, only if required.

[mross17]

1. TT is checking Line C box, 'Qualifies for Form 1116, line 18 Adjustment Exception', in the Adjustment Exception Worksheet. What is meant by 'Adjustment exception'? How does this impact line 18? Does it mean that Form 1040, line 15 should not be used for line 18? The program is populating line 18 with the amount from Form 1040, line 15. It should be calculating a lower amount. 

2. Do you know if TT supports within their calcs for line 18 the imbedded worksheet for line 18? 

3. What threshold are you referring to? I am aware of the $20,000 threshold for foreign source qualified dividends. I am reporting less than $20,000.

[rogge1722]

Adjustment exception means that adjustments to line 18 using the worksheet on p21 of the f1116 instructions is optional.  The threshold where the adjustments must be made is shown on p21 3rd column.  There are 2 amounts that cannot be exceeded to maintain the option; one on line 5 of the QDCGTW worksheet and the 2nd is less than $20k total for net foreign source cap gain + dividends.  You will find in your case you are below the threshold amounts and the exception holds.  That means that the amount on line 18 will be from the 1040 line 15 and not from the line 18 worksheet.

[mross17]

Sorry for pushing back but how do you explain the following snippet in the line 18 instructions on page 21? I meet these two requirements plus it appears I also meet the two requirements for the adjustment exception. Thanks for taking the time to assist me.

"Individuals Who Completed a
Qualified Dividends and Capital
Gain Tax Worksheet
If you completed the Qualified
Dividends and Capital Gain Tax
Worksheet in the Instructions for Form
1040, you must use the Worksheet for
Line 18 to figure the amount to enter on
line 18 if:
1. Line 5 of your Qualified Dividends
and Capital Gain Tax Worksheet is
greater than zero, and
2. Line 23 of your Qualified
Dividends and Capital Gain Tax
Worksheet is less than line 24 of that
worksheet."

[rogge1722]

This means that after you complete the worksheet, you can use the amount on line 12 on form 1116 line 18 if  you don't want to use the adjustment exception.  As stated earlier, TT by default will not make an adjustment unless it is required, but you can override TT if you choose.  ( On the desktop version anyhow.)   Also if you choose to do it on line 18, you have to override TT on line 1a and make the adjustments there also.

[mross17]

I came to the same conclusion based on your prior messages. A good enhancement would be for TT to allow the user to choose whether or not to use the adjustment without the use of overrides. This could allow the user to receive a larger portion of their credit in the current year instead of carrying forward. 

rogge1722 BTW Overriding line 18 didn't have an impact on the calculation of the lines following line 18 on the form. And by overriding line 18 I receive an error(s) stating you can't override because I am e-filing. Any suggestions on how I can get around these limitations? Could you elaborate on what you meant by override in your last response? Thanks again!

Thanks for the assistance! Most appreciated. TT needs to modify this behavior. They advertise they want the taxpayer to get the most refund owed them. This would be a good place to start.