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Form 1116 - Deductions

Hi,

 

I'm using TurboTax Premium and am reviewing Form 1116.  On line 3a (itemized deductions), it is showing my gambling losses.  However, this is contradictory to the instructions for Form 1116 (shown below).  This is not a medical expense, general sales tax, real estate tax, nor personal property tax.  Is there a way to amend this form in TurboTax before submitting my taxes?

 

Line 3a.

Include the following itemized deductions (from Schedule A (Form 1040)) on line 3a.

  • Medical expenses (line 4).

  • General sales taxes.

  • Real estate taxes for your home.

  • State and local personal property taxes.

If you don't itemize deductions, enter your standard deduction on line 3a.

 

Thanks

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1 Best answer

Accepted Solutions
pk
Level 15
Level 15

Form 1116 - Deductions

@margz , I have gone back and refreshed my memory  on this :

(a) Looked at the instructions for form 1116 ---- 3a is from Schedule-A except for interest expense deduction  and 3b is all other deductions that are not definitely connected to the foreign source income,   This  kind of lines up with your post regarding  itemized deduction allocation.

(b) looked at the internal document / instructions  from TubroTax regarding populating  the boxes on form 1116.   Here  they are taking all the itemized deduction and distributing these  to lines 3a and 3b. kind of in line with the specifics of IRS instruction for form 1116.

(c) Gambling loss ( limited by winnings) is entered on  line 16  and therefore flows on to form 1116 , line a or line b.  IRS suggests in its instruction to  include  all other "not definitely related to foreign income source expenses " such as alimony  which is an adjustment to Gross income ands on Schedule-1.

(d) The question here is what is the form 1116 trying to do --- it is trying to collect all the foreign income and all the  world income to get a ratio of  Foreign Source income to World income.  Then since all the  deduction/ adjustments that are not connected to any source ( i.e. like standard deduction   or  itemized deductions and adjustments) be allocated   ratably to Foreign Source and US source income.   What you are achieving out of this is to be able to   allocate the tax burden to foreign source income and to US sourced income.

 

Thus my position is that the gambling loss  ( line 16 of the Itemized deduction )  can be allocated to either 3a or 3b -- the end result is the same.  In a perfect world it  should be on line 3a but  either one achieves the same result -- the allocation of all deductions and adjustments equitably between the  Foreign Source and US sourced incomes.

 

I rest my case 

 

Is there more I can do for you .

View solution in original post

4 Replies

Form 1116 - Deductions

Please check back later. I will page Champ @pk

Form 1116 - Deductions

Any thoughts on this @pk?

 

Thanks

pk
Level 15
Level 15

Form 1116 - Deductions

@margz , I have gone back and refreshed my memory  on this :

(a) Looked at the instructions for form 1116 ---- 3a is from Schedule-A except for interest expense deduction  and 3b is all other deductions that are not definitely connected to the foreign source income,   This  kind of lines up with your post regarding  itemized deduction allocation.

(b) looked at the internal document / instructions  from TubroTax regarding populating  the boxes on form 1116.   Here  they are taking all the itemized deduction and distributing these  to lines 3a and 3b. kind of in line with the specifics of IRS instruction for form 1116.

(c) Gambling loss ( limited by winnings) is entered on  line 16  and therefore flows on to form 1116 , line a or line b.  IRS suggests in its instruction to  include  all other "not definitely related to foreign income source expenses " such as alimony  which is an adjustment to Gross income ands on Schedule-1.

(d) The question here is what is the form 1116 trying to do --- it is trying to collect all the foreign income and all the  world income to get a ratio of  Foreign Source income to World income.  Then since all the  deduction/ adjustments that are not connected to any source ( i.e. like standard deduction   or  itemized deductions and adjustments) be allocated   ratably to Foreign Source and US source income.   What you are achieving out of this is to be able to   allocate the tax burden to foreign source income and to US sourced income.

 

Thus my position is that the gambling loss  ( line 16 of the Itemized deduction )  can be allocated to either 3a or 3b -- the end result is the same.  In a perfect world it  should be on line 3a but  either one achieves the same result -- the allocation of all deductions and adjustments equitably between the  Foreign Source and US sourced incomes.

 

I rest my case 

 

Is there more I can do for you .

Form 1116 - Deductions

Thank you for breaking it down for me, this is very helpful

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