Foreign Tax Credit Carryover
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Level 2

Foreign Tax Credit Carryover

Last year, because things seemed too complicated for me to input on my own, I ended up hiring someone to do my US taxes. This year she's been non-responsive, so it looks like I'll be filing my own return for 2020.

 

Actually, that shouldn't be much of a problem (I hope) using Turbotax since almost everything seems very clear and straightforward this time around, with just one small exception -- dealing with a Foreign Tax Credit carryover from 2019. 

 

Looking at my 2019 return, I see that I have about $750 in "general limitation" foreign tax credit carryover, as well as about $10 of "passive income" tax credit carryover.  But all I have as "proof" of my two foreign tax credit carryovers from 2019 is some computations on an extra sheet my tax preparer sent me along with my 2019 US return.

 

In 2020, my income was fairly low, due in part to the pandemic, so I may not have enough taxable income to be able to claim any of either credit.

 

My questions are these:

1). If it turns out that I don't owe any 2020 US tax, how do I continue to carry over the credits for future use? Do I need to attach anything to my 2020 return, or will the carryover somehow be automatic until I decide to claim it within the 10-year carryover period?

 

2). If, on the other hand, I end up owing some tax for 2020, how do I actually go about claiming the credit?


I'd appreciate some advice. Thanks!

 

2 Replies
Employee Tax Expert

Foreign Tax Credit Carryover

Click this link for info on How to Enter Foreign Tax Credit Carryovers.

 

If TurboTax determines that you're unable to use the credit this year, it will carry forward for you each year until you are able to use it.  

 

You don't need to attach anything to your 2020 return.

 

 

 

 

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Level 3

Foreign Tax Credit Carryover

each category of carryover gets entered on its own 1116.  so you'll have at least 2  form 1116's with your return. the rules for using FTC is current year first (any from 2020) then backwards in time (2019 next).  because of this rule taxpayers often lose some or all of the carryforward. 

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