After entering the details in foreign tax credit sheet, TT is still showing my foreign taxes as $0, why? Am I making any mistake? The foreign taxes are for foreign wages

[rogge1722]

It might be useful to revisit the foreign tax credit interview. Do you have any 1099's  or k-1's that have foreign taxes paid?  This influences the screen sequences.

[nitinjo_2000]

I tried revisiting it several times, it just stays $0.  Will try one more time, but the answers are not going to change so I would believe it will still stay $0.

No. I don't have any k-1 or 1099s that have any foreign tax reported. As such, even if I had any such 1099 or k-1, how would that matter?

[rogge1722 · Accepted solution]

To ensure a clean start, make sure any existing Form 1116’s are deleted. We show the header, then the response.

1. Foreign tax credit
     Yes
2. Before we begin
     Yes
3. Foreign taxes
     Continue
4. Tell us about your foreign taxes
         Check the applicable entry, then Continue.
5. Foreign taxes
         Continue
6. Do you want a deduction or credit?
          Take a credit
7. Reporting foreign taxes paid.
           Continue
8. No other income or expenses
         No
9. Completing forms 1116
      Continue
10. Foreign tax credit worksheet
     Continue
11. Choose the income type
      General
12. Country summary.
      Add a country.
13. Country Name
Select the country
14. Other gross income- country
        Enter the amount even though reported elsewhere.
       Continue
15. Definitely related expenses-country
       Enter applicable data then Continue.
16. Foreign losses
         Enter applicable amount then Continue
17. Foreign taxes paid –country
        Enter the data then Continue.
18. Country summary
       Done.
Continue working through the remaining screens until finished.

The presence of 1099's or k-1's with foreign tax paid would cause extra screens to appear as TT defaults to process them first.

[nitinjo_2000]

After deleting form 1116, finally it is showing some foreign tax credit now. One more question though. At the end it gave me a message regarding Form 1116 and unusual situations. It says if any of the following situations apply, you cannot use turbotax online to prepare your return.

- Dividends received before the 16-day holding period (46 days for preferred stock) has been met
- Reduction in the foreign tax credit due to international boycott operations (if not already shown in "Reduction of Foreign Taxes")
- Foreign taxes paid on a lump-sum distribution from a pension plan and you use Form 4972 to figure the tax
- Foreign taxes paid in foreign currency and you converted the amounts to U.S. Dollars
- Some interest, dividends, partnership, S corporation, or estate and trust foreign tax paid should be reported on Schedule A, and some should be reported on Form 1116

I have obviously paid the foreign taxes in foreign currency and converting the amounts to US dollars. I am sure everyone does that. So why does it say that cant I use turbotax online if that is the case?

[rogge1722 · Accepted solution]

The IRS wants a detailed explanation statement of how the conversion rate was figured. The desktop version provides explanation statements for this purpose. I have never used the on-line version, but I think that it can be used to file a paper return. Thus a statement could be included with the necessary information with regard to the conversion rate.