Foreign Tax Credit - confusion confirming if Simplified Method was used before and how to handle the process

[ramskermfc]

Apologies for the long post. Having some heartburn around the Foreign Tax credit . . . which is frustrating since it seems like such a confusing/difficult topic for as miniscule as the dollar amounts are for me. I’d just assume “decline” it altogether to avoid the headaches. That said, I’m struggling with this in a few ways. Hoping someone might be able to make sense of things.

For 2022 return, I had $454 in Foreign Tax Credit listed under Part I non-refundable credits, Line 1. That same $454 is listed on Line 8 total. There is no Form 1116 in what was E-filed/printed. I frankly don’t remember what I did on that process last year—does the lack of a Form 1116 in the return mean that I took the Simplified Method? I don’t see anything where TTax tells me for sure for the 2022 return.

For 2023 return that I am working on now, I also have Foreign Taxes ($1,033 total from brokerage docs) On that that same Part I non-refundable credits Line 1 it shows $148 and that same $148 is shown on Part III line 23. I DO have a Form 1116 in the 2023 return with the various calculations to get down to the $148 shown under non-refundable credits. Doesn't seem like TTax "remembers" if Simplifed was done the prior year or not that I can see (would seem like it should to make it easier). 

At this point, I am confused on the 2023 return . . . I thought that I may have selected Simplified Method in the interview process, but since I have a Form 1116 does that mean that I did not choose Simplified and instead chose the non-simplified? I seem to recall seeing forms for carryover and I did not fill in values. Again, TTax doesn’t seem to have a way to see what I selected that I can tell. 

So when I go back to the screen for “First Year You are Eligible?” I am not sure what to select now since I don’t know for sure what I did for 2022 and can't 100% remember if I chose Simplified for 2023 1st time through. If I keep the selection that it was the first year and go to the next screen, the “Other Calculation” button is highlighted—which I suspect combined with the Form 1116 means I didn’t choose Simplified this year? Not sure what to do and have heard there were issues in prior years with E-file due to this Foreign Tax credit stuff (although I had no issue in 2022). Should I select the Simplified button and will that remove the Form 1116 and associated work? Should I just leave what I have for all of $148 and try to E-file?

Also . . . I do not have AMT (we almost never do) so is it even material at this point? Thanks a ton in advance for any advice from the pros on here!

[RobertB4444]

Just choose the simplified method and you should be good.  If you have carryover from last year then the 1116 may still be there but it won't matter whether you tell it first year or not.

@ramskermfc 

[pk]

@ramskermfc , while I totally agree with my colleague @RobertB4444  on  the subject, I have a slight different view point.  If the  requirement is to get most foreign tax credit i.e. reduce max US tax liability,  and given that  your Total Foreign earnings ( that has been doubly taxed -- US and Foreign Tax authorities ) is probably a small fraction of your world earnings, your allowable  Foreign Tax credit would be limited by effectively a ratio of Total Foreign Income to World Income., and therefore  you may get a better outcome  ( but you need to try this out in your particular case )  by recognizing only $600  ( assuming that you are filing a joint return  )  as your foreign tax -- you will get all $600 -- safe harbor. And not choose  form 1116.   That is my view.