Form 1116 - basic question about where to enter income.

[abhaypatil]

I just want to understand where exactly one is expected to enter foreign income when doing taxes with TurboTax desktop. I will take simple example and would appreciate an answer.

I am resident of USA. I sell a property in India for profit of $10,000/- and I have interest income of $1000 in deposits in an Indian bank. I pay tax of $3000/- to Indian tax authorities.

Are the following steps right?

• I enter my income of $10,000/- + $1000/- in Personal Income just like I enter my other USA income.
• Then I visit foreign tax credit where I report:
  • Passive income of $11,000/- (This is already part of my total income.)
  • Foreign tax paid $1000/-

Please let me know. 

Thanks.

Abhay

[DaveF1006 · Accepted solution]

Yes. You are correct on all counts.  You  would enter the sale of your residence as an investment sale. 

1. Open your tax return. I assume you are using the Home and Business version since you mention the terms personal income.
2. Go to personal>personal income
3. Go to investment income
4. Go to Stocks, Cryptocurrency .......
5. Classify this as other
6. Follow all prompts that follow to determine your capital gains income from the sale.

For the interest income you would go to personal income>interest and dividends to report the interest income. Then visit the foreign tax credit and report $11000 as passive income under the gross income section. Be sure to report the full amount of foreign taxes paid when it asks for this information in the foreign tax interview.

[abhaypatil]

Thanks a lot @DaveF1006!