Form 1116 worksheet once again a nightmare

[rcepuch]

For years, the form 1116 worksheet has been remarkably bad, and this year's no exception. Once again , the "Income from Foreign Countries" input area allows for selecting several countries (I need six). Then it says "Select a country from the list... on which to report each Form 1099-DIV." That would SEEM to imply info for each country should be entered separately – but Turbotax won't let you do it. Instead, if you select the first country and then click on Report Income and enter the figures for that country alone, the next screen you get says "You've completed reporting all copies of Form 1099-DIV to a country. Do you want to review your entries?" Click Yes and you're back where you started, click No and the only info accepted is what you've already put in for the FIRST country. Finally after reading old threads here I opted to simply use "Various" to cover all six countries and I itemized them and the relevant amounts in supporting details. That ALMOST worked, but I get error messages on the 1116 Comp Worksheet under Part 1, line 4b(1)b and c, which ask for "Adjusted basis of investment assets generating foreign income" and "Adjusted basis of total investment assets." Huh? As of 12/31/25, I assume? And only for the account in which I actually hold foreign securities? Does anyone know the answer to these questions? And Intuit, if you're listening (which I doubt), for the umpth time PLEASE make it possible to actually enter info for multiple countries!

[pk]

@rcepuch , assuming that you are reporting DIVs from a brokers' consolidated report or from a mutual fund etc., yes you may very well have multiple countries  for source income and foreign taxes paid.  Absent any other specific situations, you should use Various for the source country name, total Foreign source income  and total foreign taxes paid to these countries. Your usage of details in back-up sheet is the best way to proceed.

The basis adjustment is generally not applicable  because most often this relates to adjusting the basis  to allow for tax treaty based  tax rate by the US.  Note that the  allowable FTC is  the lower of actual paid and that imposed by the US and it is also not a refundable credit ( thus may get limited by your otherwise tax liability ).

So , unless you are a directly investing and reaping benefits from foreign source, the adjustment of basis is zero i.e. adjusted basis is the same as the in vested amount ( that generates the dividend/interest / etc. income).

Does this make sense ?   Is there more I can do for you ?

[rcepuch]

Yes, thank you. I am, however, investing directly in foreign stocks. I've tried putting a zero in that box and Turbotax says the number cannot be zero.

[gbacchin]

Indeed!

I cannot submit my return because Form 1116 ALT Line 33 reports 0 instead of the minimum between Line 20 and Line 32. Form 1116 regular is correct instead.

[hccheung]

@pk I am also getting the same error.  Please see the screenshot below.

1. 

[pk]

@hccheung , I agree that the adjusted basis of the investment cannot be zero--- the adjustment can be  and mostly is zero.

Can you give me a little data about your case and let me create that and see where TurboTax is going wrong -- any data would help.

Also did you enter the details and/or items in forms mode  or  in the step-by-step mode or you used a combination ?

  There seems to be quite a few "unhappies" with this FTC .

I will work on this once you give me some data -- yes ?

[hccheung]

Hi @pk .  This is my first time trying to fill out the Form 1116.  I have foreign dividends allocated to Various and RIC (2 1099-Div's).  I saw online that I would most likely get a larger Foreign tax credit using the Form 1116 instead of doing the simplified method of calculating foreign tax credit.  This was also the first time Turbo Tax has mentioned using simplified method of calculating foreign tax credit.  I declined it since I paid over $1k in foreign taxes.  We don't have any investment interest expenses since theses are simply from mutual funds and stocks. I initially filled everything out by going category by category.  The screenshot shown is from when I performed Smart Check and it found 3 items that needed fixing.  I figured that I don't have any deductible other interest, so I figure this section is not really needed so I put zero, but I'm guessing that I probably need to use the foreign income % provided by each broker to calculate the total foreign income (qualified and ordinary dividends) for 2025? 

Row C below contains the portion of foreign dividends by country source.

On another note, we will be MFJ itemizing deductions and are not subject to AMT. 

I feel like Turbotax need to build in more in app explanations for the foreign tax credit and how to fill out Form 1116.  There were unfortunately no popups on this screen for help.