Form 1116, Line 1a, adjustment or exception

[chopperman]

Looking for some clarification on Form 1116, Line 1a, FYI I have the TT Premier online version.

I completed the Qualified Dividends and Capital Gain Tax Worksheet in the Instructions for Form 1040 and don't have to file Schedule D.

Instructions say I must adjust the amount of my foreign source qualified dividends and capital gain distributions if Line 5 of the Qualified Dividends and Capital Gain Tax Worksheet is greater than zero & Line 23 of the Qualified Dividends and Capital Gain Tax Worksheet is less than line 24 of that worksheet. These are both true in my case.

However, instructions then go on to talk about the exception, which I do qualify for.

However when I look at Form 1116 in the Print section, the amount on Line 1a is not my foreign source qualified dividend and capital gain distribution amount per category but another number that I can't determine how it was worked out.

Any ideas please? And in the online version, is there a way I can manually edit this?

[rogge1722]

The amount you input on the screen  "Foreign- source income" header is the amount that will appear on line 1a.  TT by default will not implement adjustment exceptions if optional, only if required. 

[chopperman]

That doesn't seem fair, or right, if TT will not implement adjustment exceptions if optional, it's my choice surely.

[64dancer]

I do not qualify for the exception. I calculated my adjustment as follows:

Qualified Dividends  of 4371.31 x 0.4054 = 1772.13

Qualified Dividends of 4371.31 - 1772.13 = 2599.18

Total Foreign Income of 5670.16 - 2599.18 = 3070.98 ---> Belongs on Form 1116, Line 1a

TT has  3844 on Line 1a. I looked at the TT prepared worksheet and it is completely wrong. They have the 3070.98 on Line 1g which is titled Qualified Dividends. I looked at the worksheet from 2020 as a comparison and the line 1g was correct.

How do I correct this field in TT?

[MarilynG1]

On my Form 1116 Computation Worksheet, Line 1a is Dividend and is reporting Foreign Dividends from 1099-Div (Country is RIC, Passive Category Income). 

I entered the title 'Dividend' when reporting the amount of Foreign Income; it can be changed. I entered the amounts myself; not a calculated field; can also be changed in Col. A, B, C.  

Line 1g is 'Ordinary Income'.  If we're not in the same place, please clarify.

@64dancer

[64dancer]

I was able to resolve that issue, but then ran across another problem. TT is calculating my line 3e, Gross Income from all sources, differently than I am and their Smart Worksheet does not provide a breakdown of their total figure.  I added Wages, Interest, Dividends, Consulting Income and Capital Gains (all the positive numbers on Schedule D). TT has $2,428 more than me. I have no idea what this amount would be from. I found a place to toss an adjustment into TT to force my LIne 3e to be correct. Now that number shows up on the Smart Worksheet as an adjustment.  Bottom line is, whether I use my Gross calculation or TT's, it has no effect on the 3g and therefore zero effect on my taxes.

Do you know where to see how TT derived their number?

[DaveF1006]

This is difficult to ascertain without viewing you tax return to view all income sources. I would suggest for you to contact Turbo Tax live support so they view your screen to determine how that amount is determined.

@64dancer

[64dancer]

I would, but I do not pay for the live support. Guess I will wing it.

[64dancer]

I discovered the answer in a forum. I would like to share it to possibly help other TT users. 

If you cannot figure out how TT came up with Form 1116, Line 3e it may be because of this:

When calculating your Gross Income from Capital Gains, you cannot take the summarized numbers off Schedule D lines 1a, 1b, 2, 3, 8a,, 8b, 9 or 10. You must go through all the individual sales of your investments found in the detail of Form 1099-B and only take the positive values. Then add to that the Schedule D, Line 13 Capital Gains. This will give you the total for the Capital Gain portion of your Gross Income.

[vident]

What numbers from 1099B are you adding. I added all the positive numbers (gains) to line 13 of Schedule D and my calculated number for 2022 tax return does no match 1116B  lien 1e - which it says is Gross income for all sources. The number that TT has calculated is more than my income as on 1040. 

For me this year I had the Adjustment exception as the Foreign Div+LTCG was more than 20K. In the prior year I did not have this exception and the calculated value was reasonably close to my actual gross income on 1040.