Using 2019 carry over foreign tax credit

[AllieHoop]

This has been driving me batty, as well! Was glad to see your post. I face exact same situation. Can I not claim the carryover credit since I didn't work in the foreign country again in 2020?  Thanks very much!

[DaveF1006]

No. You would have needed to report foreign taxes this year to utilize the carryover. 

[ScubaGT63]

Hello

I saw above another customer mention foreign taxes involved in real estate sale as being relevant for a foreign tax credit.. Is that really the case? Can taxes paid as part of purchasing a property be used for a FTC?

I paid taxes in France related to (1) transfer and purchase of property (real estate purchase taxes) as well as (2) estate taxes or death duty on the death of a parent and finally (3) property taxes as the owner of a property ("taxe d'habitation" and tax "foncieres"  in France).  Are any of these allowed to be used to take a foreign tax credit?  I somehow thought only income taxes could be deducted eg taxes paid on rental income from a foreign property or taxes paid on interest income in a foreign country.  Thanks for advising

[ScubaGT63]

@vishalarati   im intrigued-- your post suggests you paid taxes on a property sale and claimed those taxes for a FTC or at least partly did.  Can you or someone else comment on whether foreign taxes paid on sale of a property can be deducted-- they are not really an income tax are they..... or are you referring to a kind of capital gains tax which you paid in that foreign country and can one take as a credit those CGTs (and as an american person you would of course also pay CGT here in the US unless you use some kind of double taxation treaty--thanks for explaining to me  

[AS161]

@RndmNmbr 

I have a very similar issue. I had tax credit from 2019. A CPA prepared it for me back then and said I should enter the carry over amount for the next 10 years (even though I am not going to use it unless I report foreign income).

for 2020 I used TurboTax desktop and I entered the carryover manually (that resulted in form 1116), I filed with no problems. For 2021, I am trying to do the same but I get an error that I have to report foreign tax income (form 2555-S), which I don't have. This is preventing me to e-file and I am not sure what to do.

I am leaning towards just deleting all related foreign tax forms, but I am concerned this may cause unforeseen issues in the future, or at least prevent me from using this tax credit in case I have foreign income some how.

[MarilynG]

Form 2555 is used to exclude Foreign Earned Income (wages).  If this doesn't apply to you, Delete Form 2555 from your return. 

Did you report any Foreign Tax paid in 2021?  On a 1099-Div entry?  If so, you will need to enter the passive Foreign Income amount associated with this tax in the Foreign Tax Credit section. 

If you reported no Foreign Income or Tax in  2021,  you can still enter your Foreign Tax Credit Carryover.

@AS161

[rlp2451]

How/where do you enter it?  Why doesn't TurboTax enter it automatically?

I didn't attempt to use the Tax Credit this year since I had no Foreign Taxes in 2021, but I still have several hundred dollars stranded from prior years because TTax said I couldn't use them.  All my taxes came from dividends, not earned income.

[MarilynG]

Under Deductions & Credits, scroll down to Estimates and Other Taxes Paid > Foreign Tax Credit.

You will be asked to enter info on any Foreign Tax you reported on your return this year.  Continue through the section until you reach a screen for Foreign Tax Credit Carryovers.

You can enter your carryover amount here.

TurboTax should carry the amount over from year to year if you aren't able to use any of the credit in the current year, but it's good to keep track yourself.

Use the Foreign Tax Credit Computation Worksheet.

@rlp2451

[AS161]

Thanks a lot @MarilynG 

I deleted all the foreign tax credit forms and re-entered again as you mentioned and now it worked. I don't know what the problem was, maybe I started from a wrong entry point.

I didn't report any foreign tax on passive income. If I understand your question correctly, this is the only case I can utilize my foreign tax credit, right?

[ScubaGT63]

@MarilynG  I hope you can help--and rather urgently

like another reader above, I am getting a persistent error on the page which shows the FTC carryover for last ten years: ( you pasted the same or at least a version of this table below - it shows carryforward of foreign taxes, taxes paid and the credits used and remaining... its the same table as last year and i think was even populated by Turbotax for the 2021 return, but now , although it correctly shows some FTC to be taken this year (more than the foreign taxes paid) and more to be carried forward, it is also showing that "there is an error " ... apparently because there "cannot be negative numbers in the carryover column (last column on right".... but there can , or an individual year, as, for an individual year the  "utilized" amount can be more than the " Foreign taxes paid " (eg if you have sufficient foreign income to take a credit against and some carryforward to use).  So the table is correct in my view and although several rows end in a negative number the overall total sum of the column "carryover" [ ie showing carryover to 2022 ] is a positive number.  What to do as like a previous customer, this is the only thing preventing me filing electronically  Please advise.  I dare not delete the table as I am afraid it is somehow linked to Form 1116 and what i find to be a rather complex process to populate that Form 1116- i wish Turbotax was set up to ask some simple questions as working out wht deductions are specifically allocatable or ratably allocated and how to del with what the total income is when you have to do that adjustment for qualified dividends and the entire process of indicating which income is foreign, is , I find challenging but ive done it now and am afraid to delete the carryforward table.  I also had no idea how to complete the AMT version of it so have left blank but im not subject to AMT anymore so assume thats ok.  Anyway my main question is about this persistent error --thanks