Foreign Tax Credits Not Being Credited to 2021 Returns

[GGBJr]

I posted a question earlier today about Foreign Tax Credits from prior years not being applied to my 2021 returns.  Below is a posting by TT when I execute the Review tab on a return:

"Form 1116 - Worksheet - Total Outgoing Value has a value.  This will require Form 1116, Schedule B, which will be available in a future product update."

Does this mean this year?  The Form 1116 does not show a DO NOT FILE, which usually appears when a form is not yet final.  The worksheet shows the 2020 carry forwards now being carry forwarded to 2022.  Why are they not being applied to the 2021 return?

THANKS FOR ANY HELP!!!

Gordon

Houston, Texas

[FangxiaL]

Make sure to enter the foreign income so that you can claim the foreign tax credit. The unused portion will be carried forward to future years.

IRS Instructions for Form 1116.

[GGBJr]

Madame --

Thanks for your speedy response!  For 2021  I had no foreign source income.  Does the tax law say that one cannot utilize foreign tax credits from previous years unless one has foreign income?  I have always been under the impression that if the credits were not fully used in a given year that they would be carried forward to be used in future years, regardless of income source.

GB

Houston, Texas

[HelenC12]

You can't utilize the foreign tax credit carryover amount if you don't have foreign earned income in tax year 2021.

• In other words, you can't the carryover credit against your US source income; it could only be applied to foreign income. 
• The Foreign Tax Credit Limit : Your foreign tax credit cannot be more than your total U.S. tax liability multiplied by a fraction. The numerator of the fraction is your taxable income from sources outside the United States. The denominator is your total taxable income from U.S. and foreign sources.

[GGBJr]

'Tis I again.

On January 19 of this year the IRS introduced a new Schedule B for Form 1116.  This is not in the TT dropdown menu of available Federal forms.  Do you think that TT will include this at some point in their software for 2021?

If this is an unknown to you, do you know to whom at TT I would forward this question?

Thanks for your help!

[HelenC12]

The Form 1116 Sch B Foreign Tax Carryover Reconciliation Schedule will be available sometime after March 11, 2022.

• Per IRS: Schedule B (Form 1116) is used to reconcile your prior year foreign tax carryover with your current year foreign tax carryover. Taxpayers are therefore reporting running balances of their foreign tax carryovers showing all activity since the filing of their prior year income tax return.