@Smkmi123 , my assumptions for your scenario:
(a) You an US person ( citizen/GreenCard/ Resident for Tax purposes) , having US tax home, filing MFJ
( b) Sold a property in India in 2023, TDS for Indian Tax year 2023/24 ( at 20% 0r 1.3% or ? )
(c) Have US tax return for 2023, did not recognize the disposal of the asset in India.
(d) Now you wish to recognize the disposition / alienation of the asset and claim Foreign Tax Credit based on finalized Indian Tax Return).
The only recourse that you have is to pursue this through amending your US return for the year 2023. To do this
(1) You will need to open your 2023 TurboTax and Open your 2023 return and save it under a different name ( e.g. append -- "As Filed" to the name that TurboTax had assigned originally assigned ), so it is available for future reference.
(2) Tell TurboTax that you wish to amend a return, select the default return for the 2023 -- i.e. not the one you saved in step (1) above.
(3). TurboTax will go through some machinations and then open the return to be amended.
(4). Now go through the Income section and select -- sold home ( here I am assuming that the home that you sold was not ever used as an income property / rental property etc. on which depreciation was allowed/used ).
(5) Answer TT questions regarding the sale -- cost basis ( the price at which you acquired the asset plus any cost of any improvements etc. ); when did you acquire the property and how etc.; sales price ; allowable sales expenses ( commission, transfer tax, repairs/changes done for the purpose of the sale etc.).
(6). TT will sue all these items to compute the gain per US tax laws. And this will then flow on to your form 1040 as capital gain.
(7). Now you have to move to the "Deductions & Credits " Tab. This will open a list of deductions and credits . From here select "Foreign Tax Credit " Select this.
(8). This will now walk you through filling out the form 1116. Here your foreign source income is the "gain" that is was computed form the sale of the property per US rules -- form 1040-line 7. Here you also provide the final Tax that India levied on the sale of the property. TT will compute the allowable Foreign Tax credit for the tax year 2023-- this will show up on Schedule- 3 line 1 and comes from form 1116 line 35.
Note that while all your foreign taxes paid is recognized , the allowable amount for the current tax year is the lesser of US tax levied and actual paid to India on the same foreign source income. The rest of the Tax Credit is banked -- ( one year back or up to 10 year forward ).
Does this help ? Is there more I can do for you ?
