Re: carryover of foreign tax credit - why it does not work?

Fig Wam · Mar 17, 2020 9:03:53 AM

I have paid foreign taxes in 2017 and 2018. Than was able to use these credit partially - in 2017 and 2018 returns. So I fill out 1116 this year, put all numbers for used and disallowed credits. But it does not change the final return at all. I suspect that the reason is - this year I am getting money back from Uncle Sam, while 2 previous years I owed him.Is it right, or the reason is somewhere else?To increase my chances for the carryover next year, should I ignore quarterly estimated taxes?

carryover of foreign tax credit - why it does not work?

I guess we'll have to agree to disagree.

Credits are already earned from prior years earnings. If I have a tax credit from US sources, future earnings are immaterial. The IRS will send me a check...plus interest.

The only way I can recapture this credit is to buy another foreign source that throws of income - which gets to be a circular Ponzi-like scheme. You can never catch up.