Foreign Tax Credit (Form 1116) not being saved as PDF

[glorenc]

I'm a long-time user of TurboTax desktop and usually take a foreign tax credit on Form 1116. Looking back on previous years, while I've been saving "All official forms required for filing" and "Tax Return, all calculation worksheets" as PDFs, I see that Form 1116 was not being included.

I poked around a bit, and am still confused. When saving to PDF on the Form Selection screen, the ONLY way to have Form 1116 show up is if it's open and the tab highlighted BEFORE clicking on File/Save to PDF. And even then, the file generated only has the first page of the form, rather than the full 2 pages.

I understand that in my case the form is "NOT REQUIRED TO BE FILED" (at the top of page 1). However, for completeness, I would like it to be. There appears to be a software bug here, or at the very least a missing option selection. Or am I doing something wrong?

[BillM223 · Accepted solution]

Please review "Election To Claim the Foreign Tax Credit Without Filing Form 1116" on page 2 of the Instructions fo.... Do you qualify under this section to not file a 1116? (Many taxpayers who pay modest amounts of foreign taxes through mutual funds do). TurboTax avoids filing forms that are not required.

The CD/download product changed this year to require you to enter the data for a 1116 if you have foreign taxes on these and similar forms. However, the IRS still does not require you to file the form 1116 if you qualify for the election in the Instructions.

If you follow the instructions below (How to get the foreign tax credit in the CD/download product without resorting to Forms mode), there will not be a form 1116 in the output, but there should be a 1116 Comp Wks (Foreign Tax Credit Computation Worksheet), which should print if you ask to print all computation worksheets.

How to get the foreign tax credit in the CD/download product without resorting to Forms mode

1. Enter the 1099-DIV(s) as usual. Be sure to expand the screen so that the additional boxes appear (foreign taxes appear in box 7). Also enter any other forms that show foreign taxes, like 1099-INT, 1099-Combo, et.
2. Clicking on Done will bring you back to the Summary screen for Income. Now go to Deductions & Credits->Estimates and Other Taxes Paid->Foreign Taxes and click Start (or Update). Note that unlike in Online, the Cd/download product requires that you complete a 1116 in order to get the actual credit. 
3. The first screen is just an intro; click on Continue.
4. The next screen is Tell Us Your Foreign Taxes. Click the first box if you have finished entering all the forms with foreign tax on them. Click on the second box if this applies to you (in the simple case, it probably won’t). If you clicked on the first box, you won’t click on the third box, and I don’t think you want to do this section if you haven’t entered all forms with foreign tax on them. Hit Continue.
5. The next screen warns you that you need a separate 1116 for each category of income. This should not be a problem in the simple case (foreign taxes on 1099-DIV, etc). Hit Continue.
6. The next screen asks if you want to treat the foreign tax as an itemized deduction or credit. We (and likely most taxpayers in the simple case) want foreign taxes as a credit). Hit Take A Credit.
7. The next screen asks where the foreign tax is from. Normally, this would be referring to country, but in the case of mutual funds or other “other regulated investment companies”, it is sufficient to list them as RIC. See the Learn More for more information. So, chose RIC in the first row, and hit Continue.
8. On the next screen, check off each form that applies to “RIC” (i.e., mutual funds and regulated investment companies in our simple case). Hit Continue.
9. The next screen is Reporting Foreign Taxes Paid with a short explanation. Hit Continue.
10. The next screen is Foreign Dividends and Tax. This has explanations about how you can find foreign income related to this foreign tax which will be asked later as well the fact that foreign tax from certain countries cannot be taken as a credit (very unlikely with a mutual fund). Hit Continue.
11. Foreign-Source Income – next you will see a series of screens (one for each form you entered) asking for the foreign income associated with the foreign tax. The Learn More in TurboTax suggests that the paperwork with the 1099-DIV may indicate the amount of income from foreign countries (and which ones).
12. No Other Income or Expenses – in the simple case, all of the listed items will apply, so you hit Yes to continue.
13. Foreign Taxes Paid – this screen is probably correct as filled in by TurboTax; however, you may want to check the documents with your 1099-DIC, 1099-INT, etc. to make sure that the taxes are paid, not accrued.
14. Carryovers or Carrybacks – In the simple case, you probably don’t have or want either. Hit No unless you have a need to hit Yes.
15. Foreign Taxes – this screen will report the amount of foreign taxes that will be applied as a credit on your return. In the simple case, this number should be the sum of what you entered.
16. Hit Continue and then go check 1040 Schedule 3, line 1 for your FTC. You will note in the CD/download product in Forms mode that there is no form 1116, although there may be a 1116 Comp Worksheet to hold all your answers until TurboTax was finished with them. No 1116 will print with your return in the simple case, which is consistent with the IRS instructions on page 2 for form 1116.

Note: this is where the $300/$600 limit comes from.

Let me know if this works for you.

[glorenc]

BillM223,

Thanks for your reply -- it's a good summary of reporting the foreign tax credit. I use Forms mode, but I read through and understand how people using Step-by-step mode would enter this information. I'm not required to file Form 1116, nor do I want to force its submission. However, I'm not seeing answers to my questions...

1. I entered foreign tax numbers on multiple 1099s which were totaled 'off-the-record'. The sum then appears on Form 1116 and flows on to Schedule 3. My 'Tax Return, all calculations worksheets' PDF contains many pages marked "Keep for your records" (i.e. "do not file"), including numerous worksheets, income statements, 1099 summaries, etc. I do not see Form 1116 or an 1116 Comp Wks, as you suggest.

    > Why doesn't TurboTax include my Form 1116 or the 1116 Comp Wks in the PDF stack for my future reference?

2. If I open my Form 1116, and then 'File/Save to PDF', it only generates the first page (of a 2 page form).

    > Why doesn't the PDF generated for the Form 1116 include Page 2? (Seems like a software bug.)

3. I entered the foreign tax paid on individual 1099s, selected 'Copy 1' and checked a column (A, B, or C). The partial numbers never made it to those columns; only the total appears on Line 35.

    > Again, for my future reference, why won't TurboTax save the filled out Form 1116, including those partial numbers and total?

[BillM223]

"I do not see Form 1116 or an 1116 Comp Wks, as you suggest." Is this when you do the entries in Forms mode or when you do it Step-by-Step as I described? I can understand you doing the process in Forms mode, but since I tested this in Step-by-Step, this is what created the Worksheet - I don't know what would create the Worksheet in Forms mode.

"If I open my Form 1116, and then 'File/Save to PDF', it only generates the first page (of a 2 page form)." There was some discussion on page 2 of the 1116 not saving earlier in this tax season, but I just looked and there was not a resolution (maybe if someone else knows of something, they can pop in).

As for your other questions, I don't have answers to why TurboTax does what it does, other than forms that don't need to be filed, aren't part of the output data set (and so might get dropped from the PDF). TurboTax's focus is on the forms that are required to be in the output, and the numbers on those forms. The fate of nonrequired forms is uncertain, and may even vary from version to version and platform to platform.

So, I am sorry I am not addressing your issues very well, other to say that so long as the necessary forms with the correct numbers are in the output, it may be difficult to address this issue. There has been a lot of discussion this spring on the 1116, perhaps I can bring this up then.

[glorenc]

BillM223,
FWIW, I prefer Forms mode in that it's less wordy, more direct, and looks like the finished product. Perfect for this old dog. However, I dropped into Step-by-step mode and was able to generate the Form 1116 worksheet using your instructions. The "Not required to be filed" main form itself remains elusive, but the worksheet is a good start.

I regularly create and populate numerous other worksheets in Forms mode, so I guess I don't understand why the TurboTax folks can't/won't include this one as well. I've come across many typos and some outright false statements in various help screens, so I guess manpower shortage plays into it.

Thanks for putting up with my rant.