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I paid over $700 in foreign taxes on ETFs. Why do I only get credit for $37?

In 2016 I paid over $700 in foreign taxes on 'Dividends and Distributions' listed on my 1099-DIV. These were from ETFs with Schwab and Vanguard. The 'Deductions & Credits' in turbo tax says I get $37 in credit for Foreign Taxes. Why don't I get credit for all?
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Level 10

I paid over $700 in foreign taxes on ETFs. Why do I only get credit for $37?

The  details are in Form 1116. 


Your foreign tax credit cannot be more than your total U.S. tax liability multiplied by a fraction. The numerator of the fraction is your taxable income from sources outside the United States. The denominator is your total taxable income from U.S. and foreign sources.

So be sure you have entered the proper amount not only of foreign taxes, but also foreign income (typically dividends) on your 1099-Ds. Sometimes you have to hunt for that information, other brokers make it obvious. Check to make sure it imported correctly.

Also I would recommend seeing if deducting your foreign taxes on Schedule A results in a lower tax liability. (I always suggest doing it both ways and choosing the more advantageous way). The 1099-DIV TT form has a checkbox for which you want to do (link to 1116 or deduct on schedule A). I believe you must do all or nothing so be consistent among your 1099-D's.

See https://www.irs.gov/individuals/international-taxpayers/foreign-tax-credit-how-to-figure-the-credit

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