Form 1116

[juleyh]

I am on Premier DESKTOP.

I imported 1099s & am currently working on my Foreign Tax Paid Credit (do not want Deduction.) 

Foreign Dividends were $3,700 & Tax Paid $631. When I went ito Forms Tab, 1116 showed a Carry Back (???) & a Carry Forward which make no sense. I have never had that before, and every year my Foreign Dividends & Tax Paid have always been almost exactly the same.

I am quite certain I have not exceeded the maximum & I certainly havn't requested Carry Forward or ESPECIALLY NOT Carry Back bc I don't want to do an Amended Return for 2024!

Something has gone haywire IMO. Do I have to start from scratch after almost finishing my Return or can I fix this problem? Can I fix it in the Form itself or is there a way to get back to the Foreign Tax Credit under Deductions & Credits and correct whatever has gone wrong? Never happened in over 10 years with Fidelity, so I'm not sure what happened.

Wouldn't it be nice to be able to see the form that was imported to make sure that it matches the physical (electronix) 1099 that was issued?

[Mike9241]

on the 1099-div you must list 1) foreign tax, 2) link it to a column on the 1116 (over $600 requires the form) 3) the foreign income and in box 8, the country.  It may be this year that your FTC is more than allowed. See form 1116. 

since you are using desktop you can switch to Forms mode to review the 1099-DIV and Form 1116. in forms mode you can make changes as needed. 

if you continue to have problems you may ned to delete the 199-DIV imported and enter the info manually. 

[juleyh]

How can I calculate to figure out whether my FTC exceeds allowable? Never happened before, & I don't know how I could possibly know whether or not my FTC would exceed what I'd be entitled to if they were US Dividends? Tax code is written very poorly & I don't trust Turbotax I think it has one rogue.

Can someone explain to me why I am paying for Turbotax if I have to figure out FOR MYSELF how to calculate? 

[DaveF1006]

The IRS limits your credit to the lesser of:

1. The foreign tax you actually paid. 
2. The portion of your US Tax Liability that is attributed to that foreign income.
3. To find your Maximum Allowable Credit, use this formula:

 FTC Limit=U.S. Tax Liability X Foreign-Source Taxable Income/Total Taxable Income 

1. If your Foreign Tax Paid is HIGHER than this result: You have "Excess Credit." You can't use it all this year; it must be carried over. 
2. If your Foreign Tax Paid is LOWER than this result: You should be getting the full credit. If TurboTax is limiting you anyway, there is likely an "Adjustment" error.

If your foreign income comes from Qualified Dividends, the calculation above changes. The IRS requires you to "weight" those dividends because they are taxed at lower rates (0%, 15%, or 20%).  If your software is forcing an adjustment on Line 18 of Form 1116, it is likely multiplying your foreign dividends by a fraction (like 0.4054 or 0.5405). This effectively shrinks your "Foreign Income" in the eyes of the IRS, which in turn lowers your "Allowable Credit."

If this doesn't address your specific issue, please reach out to us again. You shouldn't need to figure out your FTC limit.  If it is asking you to do so, where is it asking you to do so?