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Why does TurboTax say "the Foreign Tax Credit doesn't apply this year" to me when I earned foreign money and paid foreign taxes?

I re-entered my foreign income but still, TurboTax won't give me the Foreign Tax Credit. When I click the learn more button, it says it looks like I didn't make any foreign income, but I did and I entered it properly. Please help! Thanks!
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2 Replies

Why does TurboTax say "the Foreign Tax Credit doesn't apply this year" to me when I earned foreign money and paid foreign taxes?

Revisit the foreign tax credit interview.  Here are the screen headers and responses. It is assumed there are no 1099's or K-1's with foreign tax withheld.

 

1. Foreign tax credit
    Yes
2. Before we begin
    Yes
3. Foreign taxes
     Continue
4. Tell us about your foreign taxes
     Check the applicable entry, then Continue.
5. Foreign taxes
        Continue
6. Do you want a deduction or credit?
           Take a credit
7. Reporting foreign taxes paid.
        Continue
8. No other income or expenses
          No
9. Completing forms 1116
     Continue
10. Foreign tax credit worksheet
    Continue
11. Choose the income type
    General
12. Country summary.
    Add a country.
13. Country Name
    Select the country
14. Other gross income- country
        Enter the amount even though reported elsewhere.
        Continue
15. Definitely related expenses-country
           Enter applicable data then Continue.
16. Foreign losses
          Enter applicable amount then Continue
17. Foreign taxes paid –country
       Enter the data then Continue.
18. Country summary
          Done.
Continue working through the remaining screens until finished.

LinaJ2020
Expert Alumni

Why does TurboTax say "the Foreign Tax Credit doesn't apply this year" to me when I earned foreign money and paid foreign taxes?

Do you have any tax liability this year?   Foreign tax credit is a nonrefundable credit meaning if you do not have any tax liability, you cannot use it to reduce your taxes.  Check line 24 of your Form 1040.    What are your numbers from line 24 to 31?

 

As far as the steps from above, on #14 Other Gross Income, do not enter any income that has already reported on Form 1099-INT, Form 1099-DIV, Form 2555 or Schedule K-1.  If you have already entered any of these tax forms in the program, DO NOT ENTER AGAIN HERE. Leave it blank. 

 

 

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