Foreign tax credit for RIC dividend calculated is higher than actual foreign tax paid

[soodye]

In the Deductions->Foreign Taxes, I entered the RIC country for the Form 1099-DIV from my broker. After I entered the total Foreign-Source dividend income (about 20% of total dividend), TurboTax calculated that I have about $400 credit. In the 1099-DIV form imported from my broker under income section, Box 7 clearly says Foreign Tax Paid is about $130. I would have thought the maximum foreign tax credit is $130 paid. I don't have other foreign sourced income. How is this calculated? Am I missing something? Thank you in advance.

[soodye]

[removed incorrect assumption to avoid confusing others]

[rogge1722 · Accepted solution]

Since you did not use the $300/600 exemption and went thru the FTC interview, this suggests you had carryovers of at least $270.  Bring up f1116.  Line 9 displays the $130 tax paid. Line 10 displays the carryover amount of at least $270.  Line 14 displays at least $400.  Line 21 displays the maximum credit limit which would be at least $400. 

[soodye]

Thanks, rogge1722 - what is the $300/600 exemption you mentioned?

[rogge1722]

You can elect to claim the foreign tax credit  without filing form 1116 under certain conditions, one of which are the amounts indicated.   The details are outlined in the f1116 instructions.  TT by default will utilize the exemption unless you have carryovers.

[soodye]

Thank you very much. I re-checked, you are correct - TT automatically imported my prior year foreign credit carryover, hence the higher credit.