Form 1116 - Explanations

Forum|Forum|5 years ago
July 9, 2020
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The form 1116 and 1116 Copy 1 shows an error. T. Tax is asking for Explanation statements for Line 3 A, 3 B and 3 C. These are Deductions not related to the foreign source income.

What exactly is the software asking ? Can you help ?

Best answer by rogge1722

From TT's on demand guidance:

Lines 3a and 3b, deductions not definitely related:

Some deductions on your return may not definitely relate either to your foreign income on line 1 or your U.S. source income. Some examples of these deductions might be medical expenses that you deducted on Schedule A, line 4, or alimony that you paid and deducted on Schedule 1 (Form 1040), line 18a. These types of deductions need to be entered on lines 3a or 3b on the Foreign Tax Credit Computation Worksheet.

If you don't itemize your deductions, your standard deduction will automatically be brought to Form 1116.

Describe on the explanation statement what the deduction was for such as the examples given above.

rogge1722Answer

Level 10

From TT's on demand guidance:

Lines 3a and 3b, deductions not definitely related:

If you don't itemize your deductions, your standard deduction will automatically be brought to Form 1116.

Describe on the explanation statement what the deduction was for such as the examples given above.

goldiegirl

Level 2

Mine shows the standard deduction and my return is getting rejected because of this stupid glitch.

ATTA

Level 2

The $39 you see on 3a(5) is the prorated amount of only your personal property taxes, whereas the $1180 is the prorated amount of only your real estate taxes. On Schedule A, these amounts are limited. But on Form 1116, the prorate percentage amount is each line divided by the total SALT deduction ($97,936). That % amount is multiplied by 10K (the amount allowed on Schedule A) to get the figure on the worksheet. You received the full amount of your foreign taxes paid ($885) on Schedule 3.

You have a $2401 capital loss carryforward for both regular tax and alternative minimum tax (AMT) to 2024.

Your capital loss carryovers appear to be correct. The carryover summary shows the correct amount of carryover from 2022. It was the 2021 capital loss carryover worksheet that had the issue, so as long as you entered the numbers from your 2021 Schedule D (AMT)/Form 6251, you are good, and your carryforward numbers are accurate.

Hi Dawn,

My tax forms for that year didn't include the Schedule D (AMT)/Form 6251 and in my 2021 online TT version I had no option to amend the return as some recommend to get the forms.

Per the help (pic at the end of this post) on the screen where it asked for these numbers, the last section says something like if I leave the entries blank (do not enter 0), and we'll assume the amounts are the same. This did not work, I left it blank ran through the easy step section and I got the same error. So to get past this, I. used the numbers on my schedule D for 2021 and tried my best to recreate 6251. Once I got past that message, I had to correct the last two highlighted fields shown here.