Foreign tax credit not working

[BobboSRQ]

For one of my accounts, I entered the dividends and and foreign taxes paid (it is only $27).  When I got to my deductions, Turbotax recognized that I entered foreign taxes on a 1099-DIV.  I then answered the 2 questions indicating this was all of my foreign taxes and I had no carryover foreign tax credits.  The next screen says I am eligible to take the credit without filling out form 1116 but that I have not entered any foreign taxes paid.  But I did enter the foreign tax paid as part of my 1099-DIV.  So now I am not getting the credit.  Is this an error in Turbotax?

FYI - I brought up my 2024 Turbotax and looked at the same investment from last year.  I entered the data exactly the same and answered the questions exactly the same and it did provide the tax credit.  What gives for 2025?

Thanks

[DaveF1006 · Accepted solution]

Let's trace back over your answers to see if you may have missed something.

1. Go to Deductions & Credits > Estimates and Other Taxes Paid > Foreign Tax Credit.
2. Click Continue through the "Already entered?" screens.
3. When you reach a screen that asks, "Do you want the deduction or the credit?", make sure you select Take a Credit.
4. You will reach a page that asks, "Does your total taxes paid only include taxes reported on a Form 1099-INT or Form 1099-DIV?"
5. Select: YES.

If it then says you haven't entered anything, click Back and look for a small checkbox or a "Link" button that asks you to select the 1099-DIV you already entered. You may need to click Edit on that specific 1099 line to ensure the "Foreign Country" is selected (use "RIC" or "Various" if the 1099 doesn't specify a country).

If you successfully link the $27 but the credit still shows as $0, it is likely because of your Total Tax Liability.

1. The Foreign Tax Credit is non-refundable. This means it can only reduce your tax bill to zero. It cannot give you a "refund" of money you didn't owe. If you had no tax liability, the credit cannot be applied. It can be carried forward for ten years to offset any future foreign income.
2. In other words, if your other deductions (like the Standard Deduction) already zeroed out your tax liability, TurboTax will show the credit as $0 because there is no tax left for the $27 to offset.

[BobboSRQ]

Thanks for the detailed quick response.  My bad 🙁.  I am doing taxes for my retired brother-in-law and sister-in-law.  They have a very good income, but between the standard deduction, limited taxation of their social security, and the enhanced senior deduction, their tax liability is zero.  Hence the foreign tax credit is not applicable.  Sorry about overlooking that.  Again, thanks for your response.