Level 2

Solved

Foreign Tax Credit TT error: How to fix it?

Forum|Forum|7 years ago
June 6, 2019
6 replies
1 view

I believe I entered appropriately each "easy step" to obtain the Foreign Tax credit: listing the foreign taxes paid when entering the 1099-DIV for the mutual fund (box 7), selecting the appropriate options to be exempt from Form 1116 (no more foreign taxes to enter other than those entered on 1099-DIV; and no carryovers), and finally selecting the option to take a credit. The program then appropriately tallies the tax credit without Form 1116 since the amount is less than <600.

However, when doing a “Smart Check” the following error is reported: “Check this Entry Schedule B --Form 1099-DIV (Mutual Fund XXX): Foreign tax Sch A box or Form 1116 copy should be entered. Return to the place where this was entered to correct the entry.” It also provides a checkbox to click for “Foreign tax Sch A box” to correct the error. Needless to say, if I click on the provided box the credit is converted to a deduction.

I suspect this is an error in this year’s TT program, and do not know how to eliminate the error to continue filing without losing the tax credit. Any help would be much appreciated.

TurboTax Deluxe Online

Best answer by rogge1722

Try the following work around. It has worked for others.

Bring up the 1099-DIV and in Box 7, double click on that f1116 icon. Another box will appear. You will see the phrase "Form 1116 (COPY 1)”. Click on that and it will be highlighted. Then click on the "Link" button. That box will disappear and you should see the phrase "COPY 1" inside the f1116 icon in the 1099-DIV, box 7.

Then recheck line 48 of the 1040 to make sure you still have the credit. If so, that should remove the error.

R

rogge1722Answer

Level 10

Try the following work around. It has worked for others.

Bring up the 1099-DIV and in Box 7, double click on that f1116 icon. Another box will appear. You will see the phrase "Form 1116 (COPY 1)”. Click on that and it will be highlighted. Then click on the "Link" button. That box will disappear and you should see the phrase "COPY 1" inside the f1116 icon in the 1099-DIV, box 7.

Then recheck line 48 of the 1040 to make sure you still have the credit. If so, that should remove the error.

J

jeffecohen

Level 4

Thanks. I'll try this out, but will it add form 1116 to the return? The amt of foreign tax being reported is under the $600 minimum required to file it in a joint return. I suppose it can't hurt, but why give the IRS any more data than necessary?

R

rogge1722

Level 10

Here is an update on this issue.

This is a software error and here is the workaround. If you are using the desktop version, use “A”; if using the on-line version, use “B”

(A)
Bring up Form 1040 Wks. and make sure the credit is posted on line 48. If it is then bring up the
1099-DIV Worksheet. In Box 7, double click on the f1116 icon.

Another box will appear. You will see the phrase “Form 1116 (COPY 1)”. Click on that and it will be highlighted. Then click on the “LINK” button.

That box will disappear and you will see the phrase “COPY 1” inside the f1116 icon.

Then recheck Form 1040 Wks. and make sure the credit is still posted on line 48. If so, the error is cleared, no f1116 will be generated and you are done.

(B)
It is assumed you are using the exemption and the credit is posted on line 48 of the 1040 Wks. Go to the Foreign Tax Credit interview. We will be going into the interview just far enough so TT will Link to COPY 1 of a f1116 although no f1116 will actually be generated. Here are the headers and the responses.

1. Foreign Tax Credit
             Continue
2. Tell Us About Your Foreign Taxes
             Check the “None of these apply.”
              Make sure the other 2 are blank.
               Continue
3. Foreign Taxes
                Continue
4. Do You Want the Deduction or the Credit?
               Take a Credit.
5. Reporting Foreign Taxes Paid
                 Continue
6. Where Did You Receive Dividend Income From?
                If already selected, Continue, otherwise select any one. It doesn’t matter as it is not needed.
7. Income From Foreign Countries
              “Report Income.”
8. Report Foreign Tax Paid to XXXX.
             Check under “Select”.
             Continue.
9. Foreign Source Income
             If there is an entry, ignore it otherwise type in any arbitrary amount. It is only a filler and not needed.
              Continue.
10. Reporting Foreign Taxes Paid.
             At this point, TT should have inserted the Link and cleared the error without generating a f1116. We want to     vacate the interview now, so I suggest selecting “Smart Check” to see if the error is cleared. If so, verify the     credit is still on line 48 of the 1040 Wks. and you are done.

D

dan-heumann

Level 2

rogge1722, thanks so much for the help, looks like it works!

R

rlmjam-martin

Level 2

I had an 1116 problem also that I fixed for a mere $17. I have the physical media version of TT. My return was rejected multiple times for "residence foreign country code."

In looking into this, I found that IRS has a lot of peculiarities about 1116s, such as the largest claim has to be listed first. Neither the step-by-step nor the final review picked these up, and you only learn them by clicking on the links in the program and reading the detailed documentation.

I ended up with two 1116s. Copy two was required because its single entry, from a partnership K-1, concerned taxes accrued, not paid, and I had learned through trial and error that accrued and paid taxes are incompatible on a the same 1116.

That copy two entry was for $17 in taxes, and I had over $1,000 in other foreign credits. I said the heck with it, let's see what happens, so I went back into the program and removed the report of those taxes. That cleared 1116 number two. I resubmitted the return, and it was accepted.

It was only $17 this year, but this is no way to do things long term. Better guidance from TT is essential.

R

reach694ab-

Level 2

Literally everything done in TT return except the 1116 is total fiasco for tax credit. Abandoning ship, going to Tax act. Otherwise was quite happy and planning to use TT for rest of my life. All that business flush it down the toiled because you won't fix this known issue.

R

rogge1722

Level 10

I don't have TY2018 installed yet, but the following is from TY2017 which might solve the problem.

To ensure a clean start, delete f1116.

If you are asked to fill out form 1116 and you don’t need to, here is a
technique to override it. Go to the foreign tax credit interview and when you
start, here are the screen headers and the responses.
1. Foreign tax credit
          Continue
2. Tell us about your foreign taxes.
           Skip the foreign tax credit.
3. Foreign Taxes
             Continue
TT will exit the interview and the credit should appear on line 48 of the 1040.

J

jeffecohen

Level 4

having the same exact problem. am waiting to see if form 8960 fixes it.

E

emompoint53

Level 2

I deleted the company who sent the 1099DIV for only $0.58. But I can't remove the form 1116

user17716050122

Level 2

https://ttlc.intuit.com/community/tax-credits-deductions/discussion/foreign-tax-credit-tt-error-how-to-fix-it/00/3790726

This is a 2026 Update on fixing The foreign Income Credit.

When you get to the "Review"- you should get an Error that says Unable to Electronically File your taxes- you would have to submit by "Paper".

You should also see an error that says for Example- if your federal return is $20,000- It would say "The tax withheld of $20000as shown on For 1040 is greater than or equal to $0, the sum of income from the following source" - What this means is that you're reporting a "0" taxable income-as in their is no taxes to be reported on that's why you're getting the full amount back on your box w2 2a- you need to create a taxable income, in order for it to tax you and submit E-File..

Also, if you goto Tax Tools -> Tools ->View Tax Summary- you shold see your federala nd oyur taxable income would be a $0- This is the issue that needs to be fixed.

Go to Wages & Income and find the Self-Employment section. Select Start or Review next to Self-employment income and expenses.

Tell us the type of self-employment work you do-ENTER THE WORK YOU DO. For example: Cook, Teacher, Accountant etc

How do you classify this work?- Pick the middle option- "My side job income".

Pick this I started in 2025- put the date 01/01/2025

Go through the questions, you should reach a section that says- Let's enter your 1099 Income- Pick "Other Self-employed income".

Type- Electronic Payment- Enter $30,000. The key here is to make sure the amount you put in this box is higher than your Federal Return. THIS IS THE FIX.

Once you're done- if you have any expenses like Vehicle, Meals 50%,Utilities and so on- go ahead and enter them.

Make sure to do your state taxes if needed and go back to your review and the problem is Fixed. You should be able to e-file.

Here are a few tips to keep in mind for next year’s filing:
1. When entering self-employment income, ensure the taxable income amount is higher than the refund to avoid e-filing errors.
2. Use the self-employment section to accurately report income and expenses, including partial meal deductions and vehicle mileage.
3. Keep your personal information, like your driver’s license address, updated before filing to prevent verification delays.