How Can I Enter Foreign Tax Paid on a Foreign Salary??

[dmoore810]

I'm using Premier 2018 and have paid foreign income tax on a foreign salary.  I would like to take the Foreign Tax Credit but I do not see where that information can be entered in TTax.  I was not provided a 2018 1099 or other IRS document by the employer as the document was issued overseas by a non-US company.  When I follow the prompts to calculate the FTC in TTax Premier, it allows only information to be input for income taxes paid on a K1 or 1099DIV, 1099INT etc.

[dmoore810]

I do not see the steps below in Premier.  In Premier, I can only get to the point in the interview process to where it asks the country, then I have to select an existing 1099 to report the foreign income to (I have other 1099s for unrelated mutual funds).  When I do not select one of the existing 1099s, the process stops.  Is there another way?  As I said the salary income has no 1099, K1 or other American document and is totally unrelated to other 1099s that I have.

[rogge1722]

My interpretation from your remarks was that you had no 1099's or k-1;s and the documentation related to foreign earned income only. Now you say you do have 1099's. That raises another issue. If you intend to e-file, the 1st Copy has to have the greater tax paid by category. That is the passive category for the 1099's or the general category for the earned income. So which is it?

[dmoore810]

I have other 1099s and K1s, some of which will have small amounts of foreign tax paid.  I don't yet foresee a problem with reporting towards those.  The big issue for me is that I am paid by a foreign company and pay foreign income tax.  The salary and income tax are not associated with any US reporting form, 1099 or otherwise.  I assume this would be general category as it is earned income?

[rogge1722 · Accepted solution]

This shows the header and response for each screen in order that the 1st (COPY 1) F1116 will be “general category income” instead of the default “passive category income” which is the result of the initial screens focusing on dividends.

To ensure a clean start, delete any F1116’s before entering the foreign tax credit interview. .

1.   Foreign Tax Credit.
             Continue
 2.   Tell us about your foreign taxes.
            This screen may or may not appear for various reasons.
            If displayed, click on Continue.
3.   Foreign Taxes
            Continue
4.  Do you want deduction or credit?
           Credit
5.  Reporting foreign taxes paid
           Continue.
6. Where did you receive dividend income?
             Not used at this time, so just select the first one then Continue
7. Income from foreign countries
              Done
8. Need to report income
                No
9.  Simplified limitation election for AMT
            This screen may or may not appear for various reasons.
             If displayed, will assume YES is selected
10. No other income or expenses
             No
11. Completing forms 1116
           Continue
12.  Foreign tax credit worksheet
            Continue
13. Choose the income type
               General category then Continue

For screens 14 through 32, insert the applicable data.

33. Foreign tax credit summary.
              You should see COPY 1 general category income
              Select Done.
34.  Reporting foreign income expenses.
              Yes
35.  Foreign taxes
               Continue

TT will exit the interview.  Now re-enter the interview and work through the screens for the dividends to generate COPY 2, passive category F1116.

[dmoore810]

This worked like a charm.  Thanks!

[carrerawp]

I followed this. But still my foreign tax shows as ZERO..

[dmoore810]

Hello, I posted the original question here.  As I noted, the answer above worked for me but now, while completing the Federal review, I am getting an error.  On Form 1116 Credit Computation Worksheet, if I enter a 0 or other numerical value on line 12a2, it deletes the entire credit.  However, the Federal
Review error checking is forcing me to enter a value, which kills the credit entirely.

[rogge1722]

In Forms Mode, bring up the f1116 wks. Put the pointer on 12a1 and right click. On the box that appears, click on the bottom entry "about excluded  FEI_Dedns." Another box will appear with detailed info on cells 12a1 thru 12a5. Insert the amount required. If there is still an issue, click on the red error button at the top of the left pane. The cell will be highlighted, and a window will open at the bottom of the right pane with a description of the error. Clicking the error button again will close the window.

[dmoore810]

That worked.  Thanks again!

[rogge1722]

Here are the screen sequences if there are no 1099's and no k-1's.

We go through the FTC interview screen by screen
To ensure a clean start, make sure any existing Form 1116’s are deleted. We show the header, then the response.

1. Foreign tax credit
       Yes
2. Before we begin
      Yes
3. Foreign taxes
       Continue
4. Tell us about your foreign taxes
        Check the applicable entry, then Continue.
5. Foreign taxes
        Continue
6. Do you want a deduction or credit?
         Take a credit
7. Reporting foreign taxes paid.
         Continue
8. No other income or expenses
         No
9. Completing forms 1116
         Continue
10.  Foreign tax credit worksheet
        Continue
11.  Choose the income type
          General
12.  Country summary.
         Add a country.
13.  Country Name
          Select the country
14.  Other gross income- country
         Enter the amount even though reported elsewhere.
         Continue
15.  Definitely related expenses-country
          Enter applicable data then Continue.
16. Foreign losses
          Enter applicable amount then Continue
17. Foreign taxes paid –country
           Enter the data then Continue.
18.  Country summary
            Done.
Continue working through the remaining screens until finished.