I do not itemize. Trying to take $63 foreign tax credit. Get error message when trying to file that Form 1116 or Schedule A needed. How do I fix this?

[rogge1722 · Accepted solution]

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.                      

[ernelson_3]

I had the same problem and followed workaround A from above (using desktop version of Deluxe) but smart check is still flagging that I need to select column A, B, or C from 1116 even though no 1116 shows up in the forms list.  My foreign tax is in the same roughly $60 vicinity as the original poster so I suspect no 1116 is necessary.

For confirmation I followed the workaround correctly, after double clicking 1099-Div box 7b (I didn't see any f1116 icon) I did see the described popup and selected link on Form 1116 (Copy 1).  COPY 1 shows up in box 7b but the checkboxes in line 7c all go red at that point.

It appears that Turbotax 2017 placed this sort of minimal foreign dividend income into 7d, but even manually adding that in 2018 wasn't enough to eliminate the smart check issue.

I also tried creating a new named 1116 "Copy 2".  That did end up showing in the forms list so I could at least see what the 7c A B and C checkboxes correspond to.  I'm fairly certain checking A, not B, would be correct for this dollar amount.  However I'm unclear on C so probably will hope for a software patch to resolve this.

[ernelson_3]

Went back and tried B even for the desktop version which was a recommendation in another place with this question.  It worked.  Point of clarification though, in step 10 you must not complete the foreign tax interview.  You must exit the interview following step 9, without clicking any other buttons inside the interview portion of the interface.  The smart check section heading is a good way to accomplish this.

[mbeique]

Foreign Tax Credits:

I agree there is a problem with TT 2018 when trying to report foreign tax credits.  The superuser response was not helpful, since the program did not behave as stated.  Here are my observations:

1. If you try to enter the foreign tax paid in the drop down boxes made visible by checking " my form has than these boxes" in the 1099-DIV entry step-by-step, TT will treat these foreign taxes as a deduction, not a credit.

2.  To enter as a credit, please open Form 1116 (View/Forms/Open Forms) and enter the information manually on Form 1116 (Copy 1).  I did not use the form 1116 worksheet.  You may need more copies of Form 1116 if the tax was paid on different kinds of assets, or if you have more than 3 foreign accounts.

3.  If done properly, the credit will appear in the step by step summary area under "Deductions and Credits/Estimates and Other Taxes Paid/Foreign Taxes".  It will also show on Line 48 of Schedule 3, Form 1040.  It will also show on Line 12b, Form 1040.

Hope this helps you.