Foreign Tax Credit - Glitch in TT?

[mpsingh08]

On Form 1116 in my tax return for year 2021, Line 20 is $6,259, and Line 32 is $0. On Line 33, the smaller of these ($0) should show up, instead the TT shows $63. This seems like a glitch in TT, although my Foreign Tax Credit of $63 seems correct. Has anyone else run into this glitch? What should I do? 

[Anonymous_ · Accepted solution]

@pk

[pk · Accepted solution]

@mpsingh08  first Namaste ji  and not to worry.  Generally   Turbo is correct,

On form 1116:

Your total available credit is on line 14 ( current  and carryovers )  Then it goes through to apply the limitation to make sure that the credit is ratiometric   ( foreign income to world income ) and can never be more then your world  US tax. -- this is on line 21

It then allows  the lesser of the allocated foreign portion of credit ( line 21 ) and actual foreign credit available --- line 24.  This is your credit. 

If you have multiple 1116 then part IV summarizes all of these to get to your final  foreign tax credit.

So not to worry.

However, I wonder why you went through all of this ( there is nothing wrong ), because  depending on your  filing status  Joint or single ( MFJ / MFS) there is a safe harbor amount of up to $600 / 300 that you could have utilized without going through form 1116. 

Rest easy -- Turbo has done its job ( unless of course I am missing something )

Namste ji

Is there more I can do for you ?

pk

[mpsingh08]

Namaste PK ji,

Thanks for your expert guidance! Relieved to understand that TT is doing its job and there was nothing wrong in how the Foreign Tax Credit was calculated. 

It seems that TT did not carry forward unused Foreign Tax Credits from the previous years. But, again, I must be overlooking something. It is not a significant issue: the amount (if any) would have been small because of the maximum amount of credit (line 21). Also I think 10 years are allowed to capture missed credits. Next year, I will try to understand the subject to have some assurance that I am using all of the allowed credits.

Have a wonderful day!

Best regards