Form 1116

[user17736911749]

Form 1116 line 18 not calculating correctly, failing to minus 1040 line 14 as it indicated on the form.

[rogge1722]

Line 18 is subject to adjustments. The details are described in the form 1116 instructions on p.23.

[user17736911749]

Below is an instruction for form 1116 line 18 on IRS website, however turbo tax failing to adjust qualified deductions and not matching form 1040 line 15

Individuals: Enter on line 18 the sum of (i) Form 1040,
1040-SR, or 1040-NR, line 11b, minus Form 1040, 1040-SR,
or 1040-NR, line 14; and (ii) Schedule 1-A (Form 1040),
line 37.

[DaveF1006]

It depends. While the instructions say to take your adjusted gross income and subtract your standard or itemized deductions, there is a catch. If you have qualified dividends or capital gains (taxed at the lower 0%, 15%, or 20% rates), the IRS requires you to "adjust" those amounts before they go on Line 18.

This is because the Foreign Tax Credit (FTC) limit is based on your tax rate. Since dividends are taxed at a lower rate than your ordinary income, the IRS doesn't let you count the full amount of those dividends.

As a result, if you have entries on Form 1040, Line 3a (Qualified Dividends) or Schedule D, TurboTax is running the Foreign Tax Credit Worksheet to adjust your dividends to reflect the lower US tax rate for computation of the foreign tax credit.

1. The Adjustment: You must multiply your qualified dividends/capital gains by a specific fraction (usually 0.4054 or 0.5405 depending on the current tax year's brackets) before adding them to the total.
2. The Result: This makes your Line 18 figure smaller than your taxable income on Form 1040, Line 15.

[user17736911749]

In my case, the line 18 is bigger than my taxable income on form 1040, line 15. It is because line 18 did not minus schedule 1-A, line 37 (enhanced deduction for seniors).  

[rogge1722 · Accepted solution]

For line 18 of form 1116, the formula from the 1040 is (line 11b - line 14) + (schedule 1-A, line 37).

[user17744790043]

Are you able to resolve the problem?