Is it possible for a given tax year the applied foreign tax credit is actually higher than the foreign tax that was actually paid when I have a rather large FTCC?

[cmkyeung]

I am trying to file the 2024 tax return, when I enter the previous year's Foreign Tax Paid and FTC used, I found out that for that year the FTC used is actually higher than that years's Foreigh Tax Paid. As a result, the 2024 Schedule B of F1116 has an error. Highlighting that there can't not be higher FTC than the Foreign Tax Paid for that year.

[pk]

@cmkyeung  while  the general rule is  allowable FTC for the year is the lesser of  Foreign Taxes Paid  and that imposed  by the US on the same foreign income.  However , if taken literally, it would mean that carried forward ( unused) Foreign Tax credit  can never be  used.  It all depends on the exact meaning of  " Foreign Taxes Paid " -- is it the amount paid in the current year or is it the sum of  amount paid in the current year  plus any carried / unused  Foreign Tax credit?  If the latter, then yes your allowable FTC for the year may be larger  than the FT for the year -- enough to soak-up the  US taxes on the Foreign source income for the year.  Note that  Tax Treaties generally require that US recognize the total Foreign Taxes Paid ( to that country ).

Obviously I am speaking in generalities since I do not have the exact facts and circumstances  nor the names of countries involved.

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