Federal Smart Check finds 1099-DIV Worksheet issues. Has to do with Box 7 foreign tax paid, but I previously already chose "Take tax credit"?

[StoneyPA]

I know I lot of tax code changes have taken place, especially this year, but don't find anywhere that states Form 1116 must be filled out no matter what this year.  IRS still states if MFJ and foreign tax credits <$600, then no need for Form 1116, just as in recent years.

TT is seemingly stopping me here to fill out a link to Form 1116 or else change to deduct foreign taxes on Sch A, which loses the foreign tax credit.

The software already asked during deductions entry whether I was able and wanted to choose to take a deduction or take the credit.  I chose to take the credit since I was eligible, so it this just a glitch/bug?

[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.                      

[StoneyPA]

Thank you rogge1722!!!

[ls141]

I have followed the A now turbotax is asking "Schedule B -- From 1099-DIV Box 7 column should have a value for bank name" Here is what if gives me No entry, Form 1116 column A,Form 1116 column B, and Form 1116 column C. I did try No entry but that still gave the same error.

[cube1]

I followed this workaround successfully 2019/2/11 .

[rogge1722]

Try going thru the workaround again using method "B" and see if that works.

[ls141]

Thank you Rogge1722 using method "B" worked

[ernelson_3]

B worked for me as well, however the first time I tried at step 10 I continued finalizing that portion of the interview, which failed.  I misinterpreted that portion of step 10 as a suggestion to not finalize the interview rather than a requirement to not finalize the interview and a suggestion that the easiest way to do that is to click smart check.

[rdg75]

Thx rogge1722.  Just FYI for those who follow A and you first don't see ANY amount in Line 48 of 1040 wks, and you are sure you entered the Box 7 data (i.e. Foreign Tax paid) from any 1099-DIVs ... then try this:
- go to forms and open each 1099-DIV worksheet where you are sure that you entered Box 7 data.
- if the 7a box is checked on that worksheet (which says "Check to deduct Foreign Taxes on Schedule A"), then uncheck it. Repeat -- UNCHECK it to get the credit.
- then go right underneath to 7b (on that same worksheet) and double click on the f1116 icon  .. and follow rogge1772's steps thereon.
- after each 1099-DIV worksheet is done, you can go to the 1040 wks and see line 48 increase with each DIV worksheet that you go thru with Box 7 data.

[randyL321]

Is this still an issue for TurboTax 2021?  I am getting this error from Smart Check and I don't know what to do.

Thanks

Randy

[MarilynG]

If you enter Foreign Tax paid on a 1099-Div, you then have to enter the amount of Foreign Income associated with that tax in the Foreign Tax Credit section.

Your 1099-Div statement should show the amount of Foreign Dividends you received, either as an amount or a % of total dividends.

Click this link for more info on Foreign Tax Reported on 1099-Div.

[marshg246]

There is no row 48 (1040SR).  Form 1116 is wanting a detailed descrption - there should be no F1116

[MarilynG]

Can you clarify your issue?

If you paid Foreign Tax on 1099-Div, you are correct that Form 1116 does not have to be filed; however, TurboTax prepares the form 1116 worksheet to calculate the Foreign Tax Credit.

If this applies, check the box in the Foreign Tax Credit interview 'you have no more foreign taxes to enter other than those you already entered on a 1099-Div...'

Indicate that you want to take a Credit, and use Country 'RIC' to report the amount of the Foreign Dividend you received. 

Click this link for more info on the Foreign Tax Credit. 

@marshg246

[beach004]

Is it possible that this same software glitch still exists in the 2022 TT version???  I have $487 Foreign Tax credit on line 7, well below the $600 that should require filing an 1116 form; but when I run Smart Check TT insists that I must do so!!

[RobertB4444]

The $600 is for married-filing-joint filers, not for single filers so I am assuming that your tax return shows MFJ.  If that is the case then don't sweat it.  The form 1116 isn't required by the IRS but the system is hedging its bet and including it certainly doesn't hurt.

@beach004