Follow up question on foreign tax (Turbo Tax in put)

[susanroman]

I want to bypass input excess foreign tax credit amount on my downloaded 1099-Div and instead input $600 maximum on  schedule 3 of 1040 so I don't have to deal with form 1116 which is a reduced amount with a 10 yr carry forward or 1 yr carry back. Turbo Tax continues to want to use excess download amounts, Do I have to delete form1116? or Go directly to Schedule 3 of 1040 and input $600.

I understand that I wont have a 10yr carry forward or back for 2023 tax year.

When I tried to edit that specific credit section a msg  appeared "You need IRS permission"  What ???

[SusanY1]

The limitation is based on the amount of foreign tax paid, not on the amount of the credit.  You could have $600 exactly qualifying of foreign tax paid, and you would likely not have a $600 credit due to the underlying calculations.  

There are other qualifications to take the credit without Form 1116 which can be found HERE.

 

[susanroman]

Maybe I'm not understanding.

Since the(3) 1099-Divs from Fidelity show a total  $1852 "ForeignTaxes paid" and 1040 /schedule 3 limits me to $600 joint why or how can I input that amount into my TurboTax 1040 on schedule 3 , bypassing Fidelity's input and 2023 carry forwards? I accept the loss of carry forwards.

Thanks

Susan Romanowski

[SusanY1]

You would have to reduce the tax paid until it reduced the credit.  It is best not to do that, but it would be the only way to bypass the use of Form 1116 which is the proper way to handle that amount of foreign tax paid.  

[susanroman]

From the first use of TurboTax 2022, I don’t want to continue TT. program of Foreign Tax carryovers. I want to use $600 max. choice on schedule 3. ( forgoing excess) 

How do I reduce the F.T. In online program manually to $600, rather than accept Fidelity input which triggers 1116 form???

[SusanY1]

It is the total of your foreign taxes paid not the amount of the credit that determines eligibility to claim the credit without filing Form 1116.

If you paid more than $600 in foreign tax for joint filers ($300 for all others), you're required to file Form 1116 to claim any amount of credit. 

You would have to have less than $600 of tax paid and entered on the primary entry screen (likely the dividend screen) for the credit to be allowed without Form 1116.