TurboTax bug: Foreign tax credit carryover ignored when carryover is AMT only

To enter your Foreign Tax Carryover from 2018 you should:

1. Click on Federal Taxes > Deductions & Credits [In TT Home & Biz:  Personal > Deductions & Credits > I'll choose what I work on].
2. Scroll down to the Estimates and Other Taxes Paid section.
3. Click on the box next to Foreign Taxes. 
4. On the Foreign Tax Credit screen, click on the Yes box.
5. Continue through the interview, entering the requested information. 
6. You will come to the Carryovers screen.  Click the Yes box.  
7. Enter your carryover amounts on the next screen -- Foreign Tax Credit Carryovers. 

@KurtL1 - I'm not sure if you read my original message, but I'm not looking for instructions on how to enter a tax credit carryover - I know how to do that. There seems to be a problem in TurboTax where one of my carryovers is being ignored by the software and not appearing in the final generated return.

Can you address the problem that I described in my original post?

We have not had any other questions posted on this error on the Foreign Tax Carryover Statements which usually indicates that there is a problem with the software. That itself does not mean there is not a problem with the software.

To be able to see what is causing your problem we would need to see the forms and schedules on your return to determine why the program is not generating the carryover statement correctly. However, we are unable to view your return here in the Community.

To have an Agent look at your return with an Offline Review to answer your question or to schedule a time to talk to an Agent with a Live Review see What is TurboTax Live? - Community

I had a similar issue. It worked for my 2016 return but didn’t for 2017 and 2018. Can I use the carryover from 2016 to 2019 return?

I have the same problem.  I have a foreign tax credit carryover that also applies to AMT.  The AMT amount is different so I need an AMT copy of Form 1116 in the return in order to carry over the AMT credit. 

I have no AMT this year and I can't get Turbotax to include an AMT copy of Form 1116 even if I force Turbotax to include Form 6251.

it depends. First of all, if y0u entered the amt carryover from the previous years, all carryover amounts appear on the 1116 Comp Worksheet, which gets filed with your return.  It is under a heading called line 21 Section 960 (c) Adjustment Smart Worksheet.  Here is an example on what this looks like. 

@rcc_chen 

Hi,

I have that information in the worksheet.  There's regular foreign tax credit carryover and AMT foreign tax credit carryover from past years (see Form 1116 Worksheet screenshot).

The problem that while Turbotax correctly created and filled out both "Form 1116 (Copy 1)" and "Form 1116 AMT (Copy 1)", it won't put "Form 1116 AMT (Copy 1) into the return so I can e-file it.  It's there and filled out but I can't get it into the return.  (Note the "Form 1116 AMT (Copy 1)" screenshot where you can see the data in the form but the form doesn't appear where it should on the list of forms in the return on the lefthand sidebar.)

If it's not in the return I lose the (small) amount of additional AMT foreign tax carryover but more importantly, the carryover has already been filed this way in prior years so the 2022 return will be inconsistent with returns from prior years.

I don't know if this matters but those prior returns were filed by a tax accountant so there's no data about this to import.  I entered it by hand.

          Ray

Form1116 WorksheetForm 1116 AMT (Copy 1)

One more addition:  I'm paying no AMT this year.  Form 6251 is in the return because I checked the "include Form 6251 even it's not necessary" box.  I think you need it to also file the information on the AMT Foreign tax credit carryover.

If I were paying AMT this year, I suspect Turbotax would include the AMT version of Form 1116.

But I'm not and it's not.

         Ray

The AMT foreign tax credit is similar to the foreign tax credit for regular income tax purposes, except that it is limited to the foreign tax on foreign source alternative minimum taxable income (AMTI) instead of foreign tax on regular taxable income.

To ensure the AMT  Form 1116 is entered correctly, you can preview your return and worksheets before e-filing:

You can view your entire return or just your 1040 form before you e-file:

1. Sign in to your TurboTax account
2. Open or continue your return
3. Select Tax Tools from the menu (if you don't see this, select the menu icon in the upper-left corner)
4. With the Tax Tools menu open, you can then:
   • Preview your entire return: Select Print Center and then Print, save, or preview this year's return (you may be asked to register or pay first)
   • View only your 1040 form: Select Tools. Next, select View Tax Summary in the pop-up, then Preview my 1040 in the left menu

To enter the Foreign Tax Credit Carryover you can revisit these steps:

1. Click on Federal Taxes > Deductions & Credits [In TT Home & Biz:  Personal > Deductions & Credits > I'll choose what I work on].
2. Scroll down to the Estimates and Other Taxes Paid section.
3. Click on the box next to Foreign Taxes.
4. On the Foreign Tax Credit screen, click on the Yes box.
5. Continue through the interview, entering the requested information.
6. You will come to the Carryovers screen.  Click the Yes box.
7. Enter your carryover amounts on the next screen -- Foreign Tax Credit Carryovers.  

Claiming FTC

@rcc_chen 

Hope,

Thanks for the answer.  But please look at the screenshots I posted.  The problem is that my return is missing forms that were created and correctly filled out.

I already did the steps you suggested and entered the data.  The data populated correctly to all the right forms and the calculations look right.

The data populated to four forms:  Form 1116 (Copy 1), Schedule B Form 1116, Form 1116 AMT (Copy 1) and Schedule B Form 1116 AMT.

But I can't get Form 1116 AMT (Copy 1) and its accompanying Schedule B Form 1116 AMT to appear in the return for printing or e-filing because they don't appear in the "Forms in My Return" sidebar on the left.

The only way I can print those forms is to manually save them as PDF's and print the PDF files.

So the only way to file a correct return is to print the return for filing, print out the two missing forms, add them to the return, and mail it all in.  E-filing is out because Turbotax won't send the IRS the two missing forms.

Sadly, this looks like a software bug.  I've talked to both customer support and the kind folks at Turbotax Live and no one could find another answer that would result in a correctly filed return.

The case number is [phone number removed].

I hope the dev team can fix this.  It's an embarrassing bug.

             Ray

The posting software removed the case number.  Let's see if I can get it by this time.

The case number is 15  <ignore this> 1730 <ignore this> 0403.

I also sent in a diagnostic file.  Token number is  111 <ignore this> 06 <ignore this> 27.

Hopefully you can get someone on the software side to look at this.

Thanks!

              Ray

You only gave us three digits for the token number. This is normally a six-digit number. To resubmit.

At the top menu in the black line at the top of the page go to Online. 

1. From the menu, select Send Tax File to Agent. 
2. You will see a message explaining what the diagnostic copy is. Click Send and then you will get a Token number. 
3. Reply to this thread with your Token number. This will allow us to open a copy of your return without seeing any personal information.  

@rcc_chen 

DaveF,

As far as I know, the diagnostic file went through.  I don't even remember how to send it.  The first woman I talked to walked me through sending it.

It's a 7-digit number:  1110627.  I split it up in the prior message because the forum posting filters removed the case number because it thought it was a phone number.

Let's see if the posting filter leaves the token id number alone.

            Ray

I just another protected copy to you all.

Token number - 1110810

         Ray

In viewing your return and the entries made for the Foreign Tax Credit, everything was entered and reported correctly.  The reason you do not see the Form 1116 AMT (Copy 1) and Schedule B Form 1116 AMT is that it is embedded in a form called 1116 Comp WKS, which gets filed in your return.  

I have enclosed a screenshot on where you will view that in the worksheet referenced above. i hope this helps.

@rcc_chen 

DaveF,

I see that, thank you.  The problem with that is when I generate the PDF file that has all the forms required for filing, the 1116 Comp WKS isn't in the file.  That says to me that the data in the Comp WKS isn't being sent to the IRS.

What am I missing?

            Ray

The 1116 Comp Worksheet is sent to the IRS because it doesn't say Keep for your Records. if you select some of the other worksheets in your return such as 4952 WKS or Medical WKS, these say Keep for your Records. This tells me that Form 1116 Comp Wks is indeed sent to the IRS.

@rcc_chen 

So when I do a "Save to PDF" => "All Forms for Filing", why is the 1116 Comp Worksheet not present in the generated PDF file?

You're asking me to believe that the return that Turbotax generates for filing by mail is wrong because it doesn't have the AMT foreign tax carry-over but the efiling is correct?

I am confused.

          Ray

Yes, I have an answer and an apology to make to you. First of all, the apology.

I erred when I mentioned that 1116 Comp worksheet gets filed with the IRS.  The reason I said this is that it didn't have an inscription Keep for Your Own Records. it doesn't get filed with the iRS. I apologize for the misinformation.

Secondly, and most importantly, you did not have an AMT situation this year. As a result, Schedule B AMT is not needed for IRS reporting purposes.  if you look at your 6251, there was no AMT tax levied against you this year. 

Whenever there is a AMT reporting requirement though, Turbo Tax will have a record of all of the carryovers that have occurred. I would suggest either printing this Schedule B AMT or keep as a PDF to keep with your tax return each and every year you carryforward the credit for your own reference.

If you wish to print and keep a copy of your Sch B AMT F1116 and if you are using Turbo Tax software, go to forms and then open forms. Type in Form 1116. Then you will see all possible entries for form 1116. Select Schedule B-AMT (Form 1116) and then open form at the bottom. This will allow you to print the form for your records. Turbo Tax also retains this form as well as the 1116 comp wks.

@rcc_chen 

DaveF,

Thanks and no worries.  And yes, I am not subject to AMT.  However, in order to use the AMT foreign tax credit carryover, do I have to continue to report the data to the IRS every year?  Or can I keep track of it for years, then use it when I need it (assuming it hasn't expired)?

I realize that's the interesting question.  The instructions I've been able to find don't address this point.

Since you have to file the non-AMT forms to carry over the regular tax credit, I suspect my tax accountants in the past figured it was better to be safe than sorry and filed the AMT Forms to ensure that the AMT tax credit was properly carried over.

I would lean in the same direction absent clear guidance from the IRS.

Do you know if such guidance exists?

            Ray

No, you won't need to report it every year to the IRS but do track it, just in case if you decide not to use Turbo Tax in the future. As far as specific guidance, I haven't found any that address this specific issue. 

i did read in the 1116 instructions for line 10  that carryover amount had to be reported on that line and the amount was generated from Schedule B 1116.  However Schedule B AMT had no specific reporting requirement anywhere in that document. The reason being is that AMT carryover is not reported on Form 1116 itself but on a Form 1116 AMT, which is separate form. 

Schedule B AMT Form 1116 would be generated if a Form 1116 AMT was required for this year but since you did not have an AMT situation, Form 1116 AMT was left out of your return as well as Schedule B AMT 1116. 

Your tax accountants filed it because it is the best approach to be safe rather than sorry. The IRS loves paper trails even though these might not be needed.in some cases.

I hope this helps. As a FYI, the foreign tax carryover does expire after 10 years according to this IRS document.

@rcc_chen