Not able to e-file due to simplified AMT foreign tax credit

[JeanAtkinson]

@ShadowLink thanks for sharing, this is super helpful! Sounds like filing by mail is the only viable option, so I'll stop wasting time looking for a workaround.

They clearly don't have their act together. Even if they can't fix it, at the very least they should have posted a clear answer explaining the situation and apologizing for it.

[deancycle]

Yes me also, Turbotax is rejecting e-filing because it says I used the simplified AMT foreign tax credit (I don't even have to pay AMT) but just having the form there is making it so I can't efile.  Come on TurboTax, I know there are changes to IRS requirements but this one is an oversight that needs fixed for lots of people or we all have to waste paper by printing the return, mail it (hope USPS gets it there) and then wait even longer.   

[tom12345]

I ended up just not claiming the foreign tax credit, since it wasn't a large amount and it was worth it to me to e-file. If someone is aware of other tax preparation software that is able to handle this more gracefully, that would be useful knowledge to share. Who knows if this is going to still be a problem next year.

[jveranth]

I chose the "better to ask forgiveness than to ask permission" approach, filing the non-simplified AMTFTC despite the IRS rule to the contrary.  Based on past experience, there's reasonable chance that the IRS will just auto-correct it rather than forcing me to file an amended return.

[JeanAtkinson]

@jveranth maybe an interesting option. A few questions, if you don't mind:

1. Did that affect the bottom line in any way?
2. Did choosing the non-simplified method involve some difficult questions?
3. Has your return already been accepted with that approach?

thanks!

[jveranth · Accepted solution]

Regarding my decision to use the non-simplified Form 1116-AMT:

1.  I tried looked at all three of the non-AMT, the simplified-AMT, and the non-simplified-AMT.  Each gave a different number for the maximum allowed credit, but since all were greater than my foreign taxes it did not affect my bottom line.

2.  The non-simplified method did not require any more input on my part than the simplified method.  Turbotax did all the calculations, mostly involving picking some numbers from my Form 6251 instead of from my 1040 and using them in calculations with some different parameters.

3.  My return was accepted!

[JeanAtkinson]

@jveranth Thanks! I went through and it also didn't affect the bottom line. This then allowed me to go all the way to the final "Transmit my returns now" button, so clearly that removed that issue. 🙂

I have not actually sent it yet, as I'm still a bit worried about the implication of changing method from prior year. But unless I hear someone give strong arguments against it, I'll probably just do it in a week or two. As you said, better ask for forgiveness than permission! And it's not like we're cheating the IRS out of anything here, since it has no (visible) effect on anything. In fact, I'm sure we save them money by not having to deal with a complex paper return manually.

[OliveMom56]

On the other thread, a number of us went the "ask for forgiveness rather than permission" route several weeks ago and succeeded in getting the e-filing accepted.  The AMT carryover stayed roughly the same, and no (or very few) other changes were apparent on any form.  Both my federal and state refunds were identical to what they were before abandoning the "simplified" option and both appeared in my checkbook within 3 or 4 days.  If the IRS wants to pursue this calculation change, they will be coming after dozens/hundreds/thousands of TT users for filings that did not change the amount due (or to be refunded) by even one cent.

[JeanAtkinson]

Thanks @OliveMom56, this increases my confidence that it's the best path to take to get around this problem!

[s5146833]

Having same problem. TurboTax rep has no idea about this situation. TurboTax, please communicate clearly whether why this happens and whether you plan on fixing it. 

[cici1949]

It seems crazy that we need to change from the simplified method for AMT Form 1116 (which we are not supposed to do) in order to e-file.

Turbotax should at least provide an explanation about why this has happened and why they seem unable to fix it!

[JeanAtkinson]

@cici1949  Yes, it seems crazy, but that's what I ended up doing, as did several others here. It did not affect the amount, and both my federal and state returns were accepted quickly.

At this point, it seems clear they're not going to fix it. So your choices are:

1. Don't e-file. Pros: you don't break the 'rule'. Cons: painful, wasteful, slower refund.
2. Don't use simplified method. Pros: you can e-file with minimal hassle. Cons: you break the 'rule' (but you don't cheat the IRS of any money).

[Walnut5]

Great thread. I am having same problem. Return is exactly like last year but it won’t allow efiling because of the simplified AMT. (there was no AMT used last year so I wonder if TT is making an assumption about AMT with FTC?. )  I will try the suggestions above. I am concerned that paper filing just carries the TT glitch onto the paper for and then rejection takes 2 months of snail mail instead. Thank you. 

[Periwinkle65]

I am wondering whether it would be possible to e-file with the regular AMT and then follow-up immediately  with correct form and amended return  with explanation. 

[LinaJ2020]

There are e-file issues with the Form 1116 in general.  Please sign up for notification here: Form 1116 reject error

If you have both AMT and FTC, you can elect for "Simplified Limitation" which lets you use the same foreign source income for AMT as for regular taxes.  Per IRS, you must make the election the first tax year after 1997 when you claim an AMTFTC. If you don’t make the election for that year, you cannot make it for a later year. Once the election was made, it applies to all later tax years and can be repealed only with IRS consent.