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

[DaveF1006]

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 

[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

[DaveF1006]

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 

[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

[DaveF1006]

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 

[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

[DaveF1006]

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