How to add my previous years foreign tax carryovers when I don't have foreign income and haven't paid foreign taxes this year?

[hristoterezov]

I'm using TurboTax premium - the web version. When I go trough the questions for FTC I'm kicked out before the carryovers section because I don't have any foreign income this year.

[pk]

@hristoterezov , yes that is correct.  To be able to use your Un-allowed /carried over FTC you must have Foreign  income that is being taxed for the current year.  What the form 1116 is trying to do is meet the requirement(s) of  the "avoidance/ mitigation of double taxation  " clause  of the Tax treaty in effect between US and that other country / countries .

Does this make sense ?

[hristoterezov]

Sure!

I don't want to use the carryovers in the current year! I just want to ultimately fill form 1116 schedule b with the carryovers from previous years. How can I do that?

[pk]

@hristoterezov , I am lost  here.

(a) When you have foreign income and taxed by both US and another contracting country  ( Have a Tax treaty  that is ),  the "prevention/mitigation of double taxation clause  allows the use of form 1116 to get Foreign Tax Credit.  The allowable portion for the tax year under consideration is included as a credit on your current year filing.  Any remaining and unused /unallowed  FTC  ( US recognizes the full amount paid to another contracting country ) is then banked  -- can be carried back one year or carried forward for a number years.  This is carry back or carry forward.

(b)  To use this  " carried "  Foreign Tax credit  in any year ( past or future as allowed ), you must have foreign source income and some foreign taxes paid  to trigger the form 1116 computation.

Given the above, please explain  what you are trying to do .

I must be mis-understanding  your situation.  So please can you tell---

 Do you have foreign  source income ? for 2024 tax year?  

 Was this income taxed by both a foreign country (  source country ) and the USA ?

Does this  foreign taxing country have a Tax treaty with the USA and in effect ?

Please help me understand.

[hristoterezov]

My situation as explained above:

 - i have had and used FTC in previous years. I still have carryovers from 2021 and 2022.

 - Just FIY the unused FTC is valid for up to 10 years to be carried forward!

 - For 2023 and 2024 I don't have foreign income and I haven't paid any foreign taxes. Note I don't want to use FTC for the current year!

 - AFAIK to be able to carry forward the unused FTC you need to fill the form 1116 Schedule B and fill the unused balances of FTC for corresponding years. If you don't fill this you loose the carryovers for future years. This basically means for my situation if I don't fill form 1116 Schedule B in 2024, and fill in the amounts of unused FTC from 2021 and 2022, I wont be able to use it in fiture years ( lets say 2026 for example ) when I actually have foreign income.

One more time - I don't want to use FTC for this year ( I'm not eligible for this ), I know what FTC is and have used it a few times and I'm familiar with the FTC forms. The only thing I want to do is to declare unused FTC from previous years so that I don't loose it and I'm able to use it in future (lets say 2 years from now). What should happen is that form 1116 should be mostly empty and then only form 1116 schedule B should include the information about the previous years unused FTC.  I hope this brings some clarity!

So any idea how can I enter in TurboTax premier (web version) the amounts of carryovers from previous years?

[pk]

@hristoterezov  , thank you for all the info you have provided.   Since you appear to be quite familiar  with form 1116,  I am assuming here that you  do not need any  further help.  

While I have no familiarity with the On-Line version of TurboTax products , and assuming that the Windows download version is pretty similar,

(a)  the easiest way to add Schedule-B ( form 1116) is to  use the  "open form" tab  from the ribbon at the top left  and then  from the list of forms available, choose form 1116  ( the  plus sign ). This will expand the sub forms under  1116. From here choose Schedule-B and then "open".  This will add  the schedule-B ( form 1116 ). You can herein add the details of your carry over  of FTC.

(b)  here is instructions etc. for the Schedule-B ( form 1116 ) -->  Instructions for Schedule B (Form 1116) (Rev. December 2022).

Hope this helps

[hristoterezov]

On the online version I don't have ribbon or an "open form" tab or button. Attaching a screenshot of the left-side menu.

Does anybody knows how can I do this with the the online version?

[hristoterezov]

@pkor anybody else, does anybody knows if this can be done with TurboTax online or I should get the downloadable version.

[ThomasM125]

You can enter your prior year unused foreign tax carryovers using the online version of TurboTax in the Foreign Taxes section, which in under Estimates and Other Taxes Paid. You must indicate that you have foreign taxes paid in the current year on the screen that says Foreign Tax Credit:

On the screen that says No Other Income or Expenses answer "no" and you will prompt the program to generate Form 1116. Later, you will be asked to pick the country the foreign tax was paid in, so enter the country but leave the income and tax amount either blank or enter $0. 

Eventually, you will come to a screen that says Foreign Tax Credit Carryovers where you can enter your carryover numbers:

[hristoterezov]

Hi @ThomasM125 ,

Went trough the screens but mines look a little bit different. So under "Estimates and Other Taxes Paid" I see the following:

I clicked "Foreign Tax Credit" and I see:

I press continue and this is the next screen:

I choose "Yes" and press "Continue". Then I'm redirected to the following 2 screens, on each of them I press "Continue" since there isn't any other option:

When I press "Continue" on the second screen I'm kicked out of this questionnaire and I'm redirected to the screen with all deductions.

Are the screenshot you posted from the current Turbotax online version ? My screens look totally different...

Regards,

Hristo.

[MarilynG1 · Accepted solution]

Yes, in TurboTax Online you won't be able to enter your Foreign Tax Credit Credit Carryover in the interview, since you have no Foreign Income/Tax to report for 2024

However, if you transferred in your 2023 return, you'll see the FTC Carryover on the Foreign Tax Credit Computation Worksheet, after you pay for your return and View/Print/Save your return.

I would advise noting the carryover amount anyway, to be used when you do have Foreign Income/Tax to report.

@hristoterezov 

[hristoterezov]

Thanks @MarilynG1 !

When you say "I would advise noting the carryover amount anyway, to be used when you do have Foreign Income/Tax to report." do you mean to write it down somewhere locally in order to remember to use them later when i have foreign income?

Do you think this worksheet will be enough for IRS and i won't loose my carryovers?

If the desktop version would allow me to fill form 1116 schedule B, transfering to TurboTax desktop sounds like the safer option to me. What do you think? Do you know about any downsides with transferring to the desktop version?

[MarilynG1]

Yes, I did mean write it down, and keep a note with your tax files, in the event the year to year transfer is not picking it up as it should.  The worksheets are for your records; the IRS does not see them. 

No, I see no downside to  transferring your online return to desktop, where you can view the forms.  

Here's How to Transfer from TurboTax Online to TurboTax Desktop.

@hristoterezov 

[hristoterezov]

Actually can anybody confirm that with TurboTax desktop I will be able to add form 1116 schedule b and fill my carryovers from previous years without having any foreign income for this year? Maybe @MarilynG1  or @pk or anybody else?

I just want to verify this is possible before I buy the desktop version.

[pk]

@hristoterezov  before I posted before I had verified that indeed I could add a Schedule-B   to a test case that already had  a form 1116 in place.   I used  Windows download TurboTax   Home & Business.

Is this what you meant ?