Foreign tax credit

[cjlang]

I agree wholeheartedly.   I was ready to file almost a month ago except for this form.  J am required to file it so I am hoping that there are no issues when it is finally released on 3/3.

The issue you raised regarding workarounds also applies to the charitable deduction for non-filers.  There is a much more straight-forward, user friendly, intuitive way to program it.

[frjohntroy]

If the Form 1116 is ready (I assume it is from seeing the q and a), I am still having a problem.  I list the four countries from which I received dividends and had foreign tax withheld, but the forms do not let me completer the entries and don't show the credit afterwards in my entered details.  (I downloaded the transactions from my broker)

[cjlang]

I had already entered the 1099-DIV with the foreign taxes withheld amount before the Form 1116 was ready.  The foreign tax credit was not registering when I next reopened my return.  I went back and revisited that 1099-DIV and went through the steps again.  When I got to the end of that series of questions, including source, whether I wanted to take it as a deduction or credit, etc.,  the tax credit registered on my 1040.  Hope this helps. 

[DaveF1006]

To enter the foreign tax paid for the 1099 DIV('s), go to;

1. Federal>income and expenses

2. Interest and Dividends>1099 DIV

3. Depending if there is 1 DIV or several, select edit

4. As you view your DIV(S), make sure the box is checked that says My form has info in other boxes (this is uncommon). 

5. Check Box 7 to make sure a foreign tax is reported.

6. Now go to Federal>deductions and credits>deductions and credits>estimate and other taxes paid>Foreign Tax Credit to declare the credit.

I have seen instances where the imported forms did not record correctly in the Turbo Tax program.  On rare instances, it may be necessary to delete the forms and manually enter. 

@frjohntroya

[fmazziotta]

I am also having this problem.  It says that I can file without an 1116 but then it says that it doesn't show any foreign tax paid.  It is definitely on the 1099 DIV.  I also tried putting  it directly on the form 3 of the 1040 but that pushes me to a form 1116 which i don't have to use.  Then I can't delete the form because the instructions they give don't  exist.  There is no Tax Tools option.  So what is the solution?  Last year it just took it from the 1099 and put it in the right space on the 1040.  Talk about making it convoluted for no reason.

[DaveF1006]

It depends. From your response, it sounds like you are using the software version. Here is what I want you to do.

1. Go to the step by step version in your return. Delete the foreign tax entry in Box 7 of your 1099 DIV. 
2. Next go to the forms mode and se if Form 1116 and Form 1116 worksheet are still there. If so, select the form(s) and delete from the bottom.
3. Go back to step by step to your 1099 DIV form and reinsert the foreign tax paid in Box 7
4. Check your forms to see if form 1116 reappears.
5. Let me know if this helps. 

@fmazziotta

[tombuckingham]

I downloaded a 1099DIV from my brokerage and TurboTax is not handling the foreign tax credit on Form 1116.  Please fix this.

[marty18]

Did anyone have a form 8812 generated by mistake with the T.Tax update to accept "various" countries for form 1116? Every time I try to delete the unwanted and unneeded form 8812, the final review brings it back into play.

[DaveF1006]

To clarify, do you have children to claim the child tax credit? 

[mjdudeTax]

I followed the above steps and Form 1116 is gone (thank you).

When I return the Foreign Tax Credit page in step-by-step, the s/w says I have paid foreign taxes, and asks me the 'credit/deduction' question.  But then tells me I have paid no foreign taxes (and to go back to 1099-DIV).  I am way under the $300 threshold.

[HopeS]

Since your foreign tax is under the $300 threshold you will be able to claim the credit without using Fomr 1116.

In most cases, you're probably better off taking the credit rather than claiming an itemized deduction, even if the credit you claim is limited. Tax credits reduce your tax bill dollar-for-dollar, which means a $500 tax credit will save you $500 in taxes. A tax deduction only reduces your taxable income, meaning a tax deduction's benefit is equal to the reduction in taxable income multiplied by your tax rate.

You will not be subject to the foreign tax credit limit and will be able to claim the foreign tax credit without using Form 1116 if the following requirements are met.

1. Your only foreign source gross income for the tax year is passive income, as defined in Publication 514 under Separate Limit Income.
2. Your qualified foreign taxes for the tax year are not more than $300 ($600 if filing a joint return).
3. All of your gross foreign income and the foreign taxes are reported to you on a payee statement (such as a Form 1099-DIV or 1099-INT).
4. You elect this procedure for the tax year.

If you make this election, you cannot carry back or carry over any unused foreign tax to or from this tax year.

Caution! This election exempts you only from the limit figured on Form 1116, not from the other requirements described in Publication 514. For example, the election does not exempt you from the requirement that the foreign tax is a nonrefundable income tax.

@mjdudeTax 

[indiajust]

I paid foreign tax in 7 countries. EasyStep will accept 2, then each additional one wipes out one of the previous entries. If I edit in Forms View, I have A and B columns filled and can manually enter a C column.  Otherwise can't be entered anywhere.

[MarilynG1]

If your Foreign Tax was paid on 1099-Div income, you can make one entry on Form 1116 with the total amount and choose 'RIC' as the country source of income.

Here's more info on Claiming the Foreign Tax Credit. 

[octoman]

thank you for the information.  actually, I already knew this and have been using this for several years.  What's different about this year is that because the small amount of income I derived from foreign sources, I was limited in how much of the taxes paid to foreign governments could be claimed as a credit this year [it was still a better percentage, however, than I could get by going the deduction route, however.  So, for the first time I'm faced with the prospect of attempting to claim the remainder of my tax credit using a carryback to last year when I had available considerably more tax credit than I could claim then.  I'm unsure how to go about that. btw, I looked over the entire form 1116 to see how the tax credit is calculated.  Before I ever used turbotax I used to fill out the form.  The amount of potential tax credit I had available to claim was over the $300 limit so I had to use form 1116 to get the calculation of how much I could use this year.

[HopeS]

In most cases, taking the Foreign Tax Credit works out better than the deduction. To claim unused Foreign Tax Credits please follow the steps below:

1. Open (continue) your return in TurboTax
2. Make sure you've already entered all your foreign income. If you still need to enter it, do that now
3. Select Search and search for the foreign tax credit. Select the Jump to link in the search results
4. When you reach the screen Do You Want the Deduction or the Credit? select the option you prefer for your situation

If you select Take a Credit: 

1. Select Continue on the next screen, then select No to fill out Form 1116
2. When you reach the screen Country Summary, select Add a Country
3. Answer the questions about your foreign income, taxes, and expenses on the following screens
   • When finished, you'll be taken back to the Country Summary screen. If you have income from other countries to enter, select Add a Country. Otherwise, select Done
   • Answer the questions on the following screens until you reach your Foreign Tax Credit Summary. If you’re finished with this section, select Done

If you select Itemized Deduction

• Enter your foreign taxes paid on the next screen. These should show up in the Deductions & Credits section of your tax return, under Other Deductible Expenses

In most cases, taking credit works out better than deduction. We'll help you decide which one's best for you when you go through this section. Review the link below:

Where to Enter Form 1116

It is not clear if you are planning to carry back FTC to the prior year as well. If you are the steps are:

In TurboTax online,

1. Open up your TurboTax account and select Pick up where you left off
2. At the right upper corner, in the search box, type in "foreign tax credit" and Enter
3. Select Jump to foreign tax credit
4. Follow prompts 
5. On-screen "We just Check if you have any uncommon situations" Select any that apply:

• I paid foreign taxes on income I earned while working in another country
• I have foreign tax credit carryover that I want to use. Click this box and also click, Learn More. See the screenshot below:
• None of these apply

See additional information in the link below as well:

Claiming Foreign Tax Credit

@octoman 

[Edited3/6/2023| 9:56 pm PST] @octoman