foreign tax credit

[nikesyrena]

The Foreign tax credit does not apply to state income taxes.  

[shung89]

First, I'm talking about Foreign Income as wages.

Second, just because you lucked out, doesn't mean the problem doesn't exist.

I encourage people with troubleshooting information contribute to the thread so it is more constructive than it works for me.

[WaltCulver]

NikeSyrene - Wow!  That's a very good reason.  I just Googled it, since there is a foreign income credit on the Virginia form, but only for foreign pensions.

Appreciate the correction!

[jsavt]

The answer presented describing using Dummy 1099 Div is not totally correct.  What you have to do is take all the information for each stock or mutual fund reporting foreign tax out of the original 1099 according to qualified, non qualified , foreign tax and capital gains and create a separate 1099 Div for each stock or mutual fund, otherwise the required information is not properly transferred to the Foreign Tax Credit form.  Why TurboTax doesn't tell you this in the instructions or provide a way of doing this within the software is beyond me.  You have to search the web to find out how somebody found a workaround.  The only other way to do it is to just use RIC and report all the foreign tax in one lump sum and hope they don't audit you.  What does it matter what country the tax credit is for anyway?  It doesnt change anything.   I ending up buying Premier thinking it would surely deal with this but I wasted my money.  Its the same in the cheaper versions.  TurboTax must know this problem but ignores it.  Not a very good program, and difficult to trust that it does things correctly.

[wtmann45]

nasali71, it's been like this for at least the last 7-years.  Now i just enter it manually on Form 1116. ( I also buy and use the second most popular tax prep software because it works to double check my work.) I posted this problem back then and suggested that other program but that post was removed. 

[jsavt]

I tried entering manually, but I couldn't figure out how to create a second copy of the form to deal with more than 3 countries, even though in the main step by step program I can add many countries, it only creates a form with 3 countries.  How do you make additional copies of the 1116 form?

[wtmann45]

@jsavt 

Click Forms on Menu Bar.

Then Open Form.

Type "1116" into the Search box and Enter.

Highlite Form 1116 Foreign Tax Credit and click Open Form.

Bottom of next box below OR where it says Create new copy, enter "COPY #" with # being the copy you need.

Click Add Form.

Then on the open copy for Form 1116 that your just created click the QuickZoom to FTC Worksheet for data entry. 

Then enter your data. Be sure to check box with type of income (passive for dividends). Next is Resident of (country).  Enter your countries, then the income for each country. 

Now scroll down to Part II - Foreign Taxes Paid/Accrued...

Check whether paid or accrued. Enter the date for each country listed at top of form, I use 12/31/2019 for paid, then enter the dividends. 

And you're done with that copy of Form 1116. Go back to Forms and add another copy if needed. 

[jsavt]

Thanks for your help, but I still cannot figure out how to generate a second copy.  There is nothing on the bottom of my screen that enables me to make a second copy (Turbo Tax Premier).  On the worksheet and the actual form it says Copy 1, but I can't change it.  When I try to go through step by step and put in RIC and three specific countries, it does not generate a second copy, and just leaves out the 4th country.  Very annoying.  Am I missing something obvious?

[wtmann45]

If you reply with exactly what you did and what you see maybe I can help you sort this. 

[jsavt]

Thanks for your help.  I finally figured out how to generate a second copy.  As I recall I had to do it from schedule B.  Not intuitive by any means.  Of course I will forget how to do it by next year and will have to recreate everything once again.  Very annoying.

[wtmann45]

Don't worry, this has been going on for years, figured it out about 6-years ago and the posts are the same as back then, and I assume every year since. So, you can visit next year and see the same posts, unless improvements are made. 

[kosanom]

I am running into this problem with my 2020 tax return using TT.  

I will just echo your comment from last year.......THIS IS A SIGNIFICANT SHORTCOMING FOR TURBO TAX.

It is just ridiculous that I have to create "dummy" 1099-forms for EACH country that I have to report a foreign tax payment.  Using RIC for mutual funds is great.......but having to do this workaround for each stock that I own that happens to be incorporated in a foreign country is just crazy.

INTUIT - FIX THIS!!!!!!!

[kosanom]

Sorry to tell you, TT did NOT FIX this for the 2020 Tax Year. 

Same problem.  Same stupid workaround necessary.

If Intuit does not fix this, it will be my last year for using Turbo Tax.

[kosanom]

Walt - that is what I am going to do for this year's taxes (2020 filing year).  Use various and get on with it.  Don't know if the IRS will accept this as "legal", but TT basically forces you to do this.  

TurboTax and Intuit DID NOTHING to address this issue the past year.   Apparently from the long list of comments, Intuit REFUSES to address the problem.

All you can do is vote with your wallets and choose another tax software next year.  I **was** a Turbotax user since 2003...........

[DaveF1006]

This is not so much a Turbo Tax shortcoming as it is an IRS requirement. Foreign taxation is painstaking but must meet all the compliance regulations set forth by the IRS.