Using Foreign Tax Credit Carryover

[JAIME-TITOMALONE]

Hello experts, last year I had FTC Carryover that I would like to use this year. I am in the TurboTax form listing the FTC Carryovers during the past years (2023-2014). The only year for which I have carryover is 2023. In this form there are two columns: 'Foreign Taxes' and 'Amount Used'. I would like to confirm that, under column 'Amount Used' for the year 2023, I should input $0 as 2023 is the 1st year in which I've had carry over and I've never used it before. Also, I would like to clarify if Turbo Tax will try to use as much of that Carryover in this year's return or whether I need to manually specify the amount to use in 2024. Many thanks!

[DaveF1006 · Accepted solution]

Yes, you are correct! Since 2023 is the first year you have a Foreign Tax Credit (FTC) carryover and you haven't used any of it yet, you should enter $0 under the "Amount Used" column for 2023.

As for how TurboTax handles the carryover, it will automatically calculate and apply as much of the carryover as possible to your 2024 tax return, provided you have eligible foreign income to offset. You don't need to tell TurboTax how much to use. TurboTax will use your carryover the best based on your tax situation.

[JAIME-TITOMALONE]

Thanks Dave!

Quick follow-up questions:

1. Will Turbo Tax proactively readjust the offset it introduces if I make any changes to e.g. my declared incomes?

2. I might end up using Turbo Tax Desktop on account of some Form 8621s I need to file. Do you know if the Desktop version automatically calculates the offsets too?

[ThomasM125]

Assuming your foreign tax credit carryovers are listed in TurboTax, the program will automatically apply the appropriate carryover credit to the foreign income allowed in the current year. It will automatically update if you change the foreign income entries. The desktop program will automatically update the same as the online version.