foreign tax credit

[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.

[wtmann45]

No, it is a TurboTax shortcoming, the program will not allow you to input the data in Step-by-Step if you have multiple countries. I assume it works if you have only one country or use Various, but I usually have between six and nine countries. I solved the problem for myself by going to Forms mode and entering all the data manually. All of my foreign tax is due to dividends, so it is not that complicated to claim the credit versus the deduction (once you figure how to populate Form 1116 using the Foreign Tax Credit Computation Worksheet). 

[kosanom]

Thanks for your reply.

First, I am by no means a tax expert.  That is why I purchase TT year after year.  True, the IRS has many non-sensical requirements.  But that is why we purchase TT to help efficiently navigate IRS tax filing requirements.  This inability of TT to handle foreign tax credits for multiple countries for each 1099-DIV form is a failure of TT.  

They need to fix this.  We are not going to fix the IRS.

[wtmann45]

"They need to fix this.  We are not going to fix the IRS."

Well put!

🙂

[nikesyrena]

Agree 100%.  Even lawyers cannot understand the Code.  How could any normal person be expected to understand it.  Now you need a lawyer to insulate you from liability every year, but that is  another story.    I prefer to file myself simply so that I have some idea what is going on and to remind me how ridiculous the IRC has become.  

[KTS16]

This problems remains in TurboTax Premier for taxyear 2020.

[WaltCulver]

Folks - I'm kinda late getting into this thread.  Haven't started on my taxes yet, nor do I pay much attention to tax matters until I get my various K-1s.

But I too have a sizable number of foreign dividend sources, and here's what I do that takes hardly any extra work:

1. In the Step-by-Step method of entry, go to the screen "Let’s get the details from your 1099-Div...";
2. In Box 7 enter the Tax Paid amount;
3. Go two more screens and enter the amount for ALL your Foreign Dividends for that 1099-DIV;
4. On next screen enter "Various";
5. Click "Show Relevant Form" at the bottom of this screen.  Up will come Form 1099-Div Worksheet;
6. Box 7 will have all dollar amounts already filled in.  NOW THIS IS KEY.  In Box 7 use entry “b” for a “link to Form 1116”, and the blue box should show “COPY 1”, or a similar copy number.
7. In Box 7 in entry “c”, make an X in one of the “column” boxes. 

That’s it.  Box 8 should already how the “Various” you entered before you hit Relevant Form.

[djrich49]

Thank you.  I have a grand total of $10.82 foreign tax paid on $82 of dividends.  It still rejects my efile.  4 times !!  I even tried entering the 1099div with no foreign tax in box 7. still no good.   TT has foreign tax credit carry over!  I'll just file the darn thing by mail.  If the IRS still rejects it for the measly $10 credit hopefully they will explain the error better than their efile reject message.  Very frustrating. (/Return/ReturnData/IRS1116/ForeignTaxCreditSource/USTaxWithheldOnDividendAmt - Data in the return is missing or invalid)

[nikesyrena]

You probably did not associate a Form 1116 with the credit. Why we have to do this is a software defect, but as I have noted many times, TT handling of the Foreign Tax credit is a bad joke.  

[Community778291]

I am amazed that the convoluted solution to TT's software shortcoming of not permitting the entering of multiple countries for foreign tax credit purposes remains - "create dummy 1099 DIV's!!"  Today, I was advised add together the multiple 1099 DIVs and label the sources as "RIC," (Regulated Investment Corporation) eliminating the requirement to enter country source, sorta like using the term "Various."

Interested to learn of anyone escalating this multi-year issue above the "expert" level of Intuit.

[taxidr23]

I chose to claim to take the credit as an itemized deduction and then made sure I deleted the Form 1116.  Got it accepted.

[brucefal]

Marka 100,

Do it the way Vanguard leads you to.  Compine all the taxes into one entry and all the income into 1 entry.  Then enter it and when it asks "what country?", choose "Various".  It works for me.

My thinking is that if the IRS wants a breakdown by country for its statistics, either give me a call and I will giuve it to them, or force TT to make multiple entries to work.

[Barb 88]

TT calculated by $326.40 Foriegn tax credit to allow and use only $8.00 and can't email my return what if I don't claim the Foriegn TAx Credit???

[DaveF1006]

Yes, you don't have to claim it if you don't want it. You will need to delete it from your return and you may need to delete Forms 1116 and Forms 1116, Schedule B by going to tax tools>tools>delete a form>delete and forms or worksheets that reference the number 1116. 

[nikesyrena]

Itemized deductions are worth only 25% on the dollar or whatever your marginal tax rate is.  A credit is 100 cents on the dollar.  TT is forcing people to lose tax savings because the software is not user friendly and folks just give up to get it over with.   Not a great endorsement for TT and this is a software problem that has gone on for years.  Report is all as one country and one foreign ax and one foreign dividend amount.