April 11, 2025
Hello to All of You!
I fully agree with Trekker1 regarding Form 1116, i.e., "One reason for not wanting the credit is Form 1116 is very complicated and it may not be worth the trouble."
I do NOT see any DETRIMENT (LOSS) to the IRS if taxpayers decide voluntarily to LIMIT their Foreign Tax Credit to either $ 300 (for single filers) or $ 600 (for married filers) when in fact they paid MORE inForeign Taxes. Reflecting the $ 300 (or $ 600) on Schedule 3, Line 1, and ultimately reflecting it on Form 1040, line 20 is SO EASY to accomplish when compared to filling out Form 1116.
In addition, the IRS has NOT been HARMED in any manner from such taxpayer action.
Finally, I think that the IRS should rethink its position and allow taxpayers themselves to decide which option to choose, EVEN IF the taxpayer has more than $ 300 (or $ 600) in Foreign Taxes but is willing to limit the tax credit to $ 300 (or $ 600)..
Does anyone know of any instance when the IRS has raised this issue with a taxpayer who had more than $ 300 in Foreign Taxes but decided NOT to use Form 1116 and instead used Schedule 3, Line 1 and ultimately Form 1040, line 20 up to the $ 300 (or $ 600 amount)?
Thank you in advance for your response to my question above.
Respectfully,
OurTaxSystemIsTooComplicated!
