Foreign tax credit - Do not enter any income already reported on Form 1099-INT

[astral101]

Got it. Thanks. 

@pk 

Just to confirm, this will not be an issue with the IRS (the fact that I am selecting I work for Clergy...form 4029 even though I don't do religious work?

Another quick question: Under the section: Wages & Income > Foreign Earned Income and Exclusion, am I required to enter the "net" or "gross" income? This is important because in the FTC section it specifically requests the "gross income" but the section Foreign Earned Income and Exclusion, for "wages", does not specify.

[pk]

@astral101 , I know  but  the explanation entry may eliminate/ mitigate this.  If you remember my earlier post   referred to IRS comments/ instructions on this.  It is hokey but  that is the nearest  I can think of. for getting the result you need.  If you just delete the  Schedule-SE, then TubroTax will probably complain and stop you from e-filing ( I have not tried this ) -- so it is kind of between a Rock and a hard place.

[astral101]

@pk Sorry I don't remember the IRS instructions regarding this:

 I know  but  the explanation entry may eliminate/ mitigate this.  If you remember my earlier post  referred to IRS comments/ instructions on this.  It is hokey but  that is the nearest  I can think of. for getting the result you need.  If you just delete the  Schedule-SE, then TubroTax will probably complain and stop you from e-filing ( I have not tried this ) -- so it is kind of between a Rock and a hard place.

[astral101]

Hi @pk . Please see a follow up question below in bold/italics:

The interest income is from Canadian banks. But TurboTax says on form 1116 "Do not enter any income already reported on Form 1099-INT" but I have also paid tax on this interest income. If I can't report it on form 1116, my foreign tax credit will be lower and I will be taxed again on this income in the U.S.

Interest income from Foreign sources is reported as interest income  as part of your world income ( with NO 1099-INT ) -- you tell TurboTax that this is interest without a 1099-INT -- it will accept that data. 

If I go to enter this income as part of my "world income" as you stated above under the "foreign income and exclusion" section , TT gives me 4 options and none of them seem appropriate to enter interest income:

A regular form W-2 from your employer

A Form 1099-MISC or other self-employment income
A statement from my foreign employer (could be cash)
An IRS Schedule K-1 from a business partnership

So the question is, how exactly do I enter this interest income so that I can claim a FTC against it? The issue as I stated earlier is that when you are on form 1116 for FTC purposes, TT says "do not enter any income you already reported (for example on form 1099-INT, 1099-MISC, etc.", so I need to enter this interest income in a way that I can then claim additional FTC as I paid Canada almost 20% tax on this foreign interest.

On form 1116 , you select category " Passive" and report this income again as foreign sourced income and the taxes you paid/allocated to this income.  Note that if this tax is equal or under the Safe Harbor threshold then you should use that rather than form 1116. But how do I do this when I am only using one 1116 form

[pk]

@astral101 , not being familiar with the on-line product  don't know the exact path.  

In  Windows CD/Download  product   under personal income tab ,  TubroTax fist deals with W-2  and here you choose  "I don't have a W-2" and continue. Thin then opens up a window  with essentially two options;

"we will walk you through income categories"  and " I will choose what I work on ". Once you choose the latter and new widow will all income categories open up--- you select and work on each as appropriate.  This is where  you get the passive incomes like  Interest , Dividend etc.  This what I was referring to 

I will page @VolvoGirl  to help -- since she knows the on-line version well.

[astral101]

Hi @VolvoGirl. Following up on this...

[astral101]

Hi @pk anyone else besides @VolvoGirl that may help?

[astral101]

@Anonymous_ There is no support via chat/online/forum/community?

[astral101]

@Anonymous_ I'd rather continue with the Community based support as I am able to be provided links to pages, images, etc. As you can see there are many details that would simply get lost on the phone. For example, on a separate thread I was told that I could switch from online to desktop for the current year but the link I was provided states that it cannot be done for the current year. Imagine if that conversation didn't take place online how counterproductive it would have been on the phone.

[astral101]

@Anonymous_ @VolvoGirl @pk

Hi. Any update on this? Thanks.

[pk]

@astral101 , I do not know how to help you more  --- I only have  the windows product  but the general procedure that I suggested should be valid also for the online version.    Please , if you have  specific question on the tax front, I am very happy to help.  Please forgive  my  lack of knowledge of the on-line product.

pk

[astral101]

hi @pk Yes. The question is the same as before. Please see below in bold/italics:

The interest income is from Canadian banks. But TurboTax says on form 1116 "Do not enter any income already reported on Form 1099-INT" but I have also paid tax on this interest income. If I can't report it on form 1116, my foreign tax credit will be lower and I will be taxed again on this income in the U.S.

Interest income from Foreign sources is reported as interest income  as part of your world income ( with NO 1099-INT ) -- you tell TurboTax that this is interest without a 1099-INT -- it will accept that data. 

If I go to enter this income as part of my "world income" as you stated above under the "foreign income and exclusion" section , TT gives me 4 options and none of them seem appropriate to enter interest income:

A regular form W-2 from your employer

A Form 1099-MISC or other self-employment income
A statement from my foreign employer (could be cash)
An IRS Schedule K-1 from a business partnership

So the question is, how exactly do I enter this interest income so that I can claim a FTC against it? The issue as I stated earlier is that when you are on form 1116 for FTC purposes, TurboTax says "do not enter any income you already reported (for example on form 1099-INT, 1099-MISC, etc."), so I need to enter this interest income in a way that I can then claim additional FTC as I paid Canada almost 20% tax on this foreign interest.

[rogge1722 · Accepted solution]

You have foreign earned income and foreign interest to claim credit. From your posting, you are working thru the FTC interview to process the foreign earned income. When you finish, you will have the credit posted on Copy 1 , general category income.

To process the Interest, you need to go to the income section and bring up a blank 1099-INT form. Insert the payer's name , the amount in box 1 and the tax withheld in box 6. TT will then post the amount on Schedule B to report the income. TT sees the amount in box 6, so when you enter the FTC interview the second time, TT will present the screens that are designed to process the interest. TT will generate Copy 2, passive category income and display the credit.

Copy 1, part 4 is the summary. Verify the credit for earned income is the greater amount.