Foreign tax credit carryover directly to following year (no foreign income)

[pnivek]

I have foreign tax credit carryovers from previous years in several income categories.  This year I have no foreign income in those categories, so I cannot use the credit for 2019.  Given that, do I need to file Form 1116 for each income category anyway, in order to bring those carryovers forward to 2020?

In other words, I'd like to know: (1) does the IRS require documenting unused carryovers every year, and (2) will TurboTax allow me to re-enter the carryovers as needed in future years?

[DianeC958]

Yes, you do need to file the form 1116 to carry the tax credit forward until you can use the credit.  If you do not document the carry over you will lose the credit.

Yes, TurboTax will allow you to re-enter carryovers as needed in the future years.

Foreign Tax Credit

[pnivek]

Hi, thank you for your response!  However, the problem is that TurboTax Premier will not generate Form 1116 if there is zero income in a particular income category.  Specifically for me:

• I had foreign passive income in 2019 and carryover from previous years.  Form 1116 and a carryover statement are correctly generated for passive income.
• I had no general category foreign income in 2019, but I do have carryover from previous years.  After filling out a "Foreign Tax Credit Computation Worksheet" for general category income (with zero income, but non-zero carryovers), neither Form 1116 nor a carryover statement are generated for general category income.

So it seems TurboTax will not generate Form 1116 when the income is zero for a given category.  If I do need to file this in order to continue the carryovers, how can I force TurboTax to generate the form?

[KarenJ2 · Accepted solution]

If TurboTax will not print the carryovers for the general category tax credit, just keep a record of the carryovers that you do have with a copy of your 2019 tax return.  If you have general limitation income in a future year, you can enter your carryover information in that year.  Just keep track of it.  It can be carried back one year and forward 10 years.

[pnivek]

Thank you, I was hoping that was the case.  It was a little unclear in the first response, which seemed to imply that it was necessary to file Form 1116 (even without foreign income) in order to keep older carryovers available for future years.  I will keep detailed records and re-enter the carryovers if/when they apply in the future.

[KarenJ2]

You are welcome!