Explanation of Credit Carryover (FTC)

[Daveh110]

I'm working on my Foreign Tax Credit (Form 1116) via the interview process.  After reviewing my FTC carryovers, and then my AMT FTC Carryovers, TurboTax presents a screen that asks me: "Explain how you calculated the amount of foreign tax credit carryover from 2020."  And gives me 4 empty lines.

I'm mystified because I have simply accepted the numbers it filled in from my previous return. It seems like my explanation would be: "TurboTax did it." Or According to 2020 Form 1116.  Or maybe blank, since I've made no adjustments to TT's numbers.  (I didn't carry back anything since I've had plenty of carry-forwards in previous years.)

[JohnW152]

I’d suggest explaining by saying roughly what you say above:  I accepted the TurboTax calculation after I reviewed my Foreign Tax Credit carryovers and AMT Foreign Tax Credit carryovers.  I’ve made no adjustments to the figures used by the TurboTax program.

It’s truthful and probably reflects what 99% of the users actually do.

[Daveh110]

Thank you.  I inserted the first line of text like you suggested, but as soon as I did, TurboTax filled in the remaining 3 lines with lines like:

Foreign Tax Credit Carryover From [Year]       [Amount]

...

Maybe THAT'S What I'm supposed to put in there?  ie: copy info from my 2020 FTC carryover statement and then add the carryover left from 2020?  What do you think?

[JulieS]

Yes, you have a good understanding of what is expected from the statement. That sounds perfect.

[mrabi2000]

I received a check from FTC stating that it is a "share of settlement between me and the university where i studied". Is this taxable/

[DawnC]

It depends.   They often are, but it depends upon the type of settlement.   The settlement type will be listed in your Final Settlement Agreement.   

Are settlements taxable?

How do I enter settlements on my tax return? 

@mrabi2000