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Circular error in Foreign Tax Credit Computation Worksheet
I am aware that an adjustment to qualified dividends and LT Capital Gains is required if the following is true.
- You have foreign qualifying dividends or long-term capital gains totaling more that $20,000, OR
- Your total income exceeds the following amount for your filing status:
- Married Filing Joint or Qualifying Widow(er): $223,050
- Single: $183,250
- Head of Household: $203,150
- Married Filing Separate: $111,525
But I get an error if I change lines (1i) Section 1250 (25%) Capital Gains and (1j) Collectibles (28%) Capital Gains to be the value that TT says is the minimum because they then add up to more than line (1m) Qual. Dividends and LT Capital Gains. How do I fix this error in TT?
For reference, this is from Part 1 - Taxable Income (Loss) of the worksheet
1 Gross income:
a
b
c Interest and Dividends from Schedule B
d From Schedules K-1
e From Form 2555 foreign earned income
f Unadjusted gross income this category
g Ordinary Income
h Qual. Dividends and LT Capital Gains
i Section 1250 (25%) Capital Gains
j Collectibles (28%) Capital Gains
k Adjustment required for QD/LTCG
l Net Qual. Dividends and LTCG
m Adjusted gross income this category
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Circular error in Foreign Tax Credit Computation Worksheet
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Circular error in Foreign Tax Credit Computation Worksheet
Here is a suggested workaround. Add up 1i and 1j and add that to 1h. As long as 1h is less than $20,000, it should not have any adverse effect which can be verified if 1m does not decrease.
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Circular error in Foreign Tax Credit Computation Worksheet
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Circular error in Foreign Tax Credit Computation Worksheet
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Circular error in Foreign Tax Credit Computation Worksheet
(1) Create a dummy 1099-DIV because this is not the first country for the 1099-DIV. Enter following values:
Box 1a (Total ordinary dividends) = 0
Box 7 (Foreign tax paid) = 22
(2) Click continue to get to Report Foreign Dividends. Enter following values:
Foreign Dividends Received = 225
Select dividends are from "Other source". Click continue and enter:
Foreign Country = ABC
(3) Click on "Deductions & Credits" and click Edit for Foreign Taxes. Continue until the page "Any foreign source qualified dividends or long term capital gains?"
(4) TT shows:
Total foreign income for this catefory under column for country ABC = $225 (This value cannot be changed)
Foreign qualified dividends and lt capital gains = 225
(5) Make sure entries for next two lines are zero
Foreign unrecaptured section 1250 (25%) gains = 0
Foreign collectible (28%) gains = 0
(6) Click on Federal Review to check the tax credit. TT shows a todo for review. Click button to review.
(7) TT shows Check This Entry page with message "Collectibles (28%) should have a value of at least $225". Enter value:
Collectibles (28%) gain = 225
Click continue
(8) TT shows Check This Entry page with message "Section 1250 (25%) should have a value of at least $225". Enter value:
Section 1250 (25%) gain = 225
Click continue
(9) TT shows a todo for review. Click button to review.
(10) TT shows Check This Entry page with message "Section 1250 (25%) plus 28% collctible should not exceed total Qualified Dividends and Long Term Capital Gains" which is $225 - see step 4. This is why I called this a circular error.
Note: on the Check This Entry page, the worksheet shows:
k Adjustment required for QD/LTCG = -134
l Net Qual Dividends and LTCG = 359
m Adjustment gross income this category = 359
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Circular error in Foreign Tax Credit Computation Worksheet
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Circular error in Foreign Tax Credit Computation Worksheet
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Circular error in Foreign Tax Credit Computation Worksheet
how on earth do I "bring up the worksheet" ?
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