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Level 5
posted Apr 15, 2024 3:43:01 AM

Form 1116 Explanation Statements

Upon completing form 1116, TurboTax is asking for an explanation statement for line 2 to explain "expenses definitely related to the income on line 1a"  and another explanation statement  for line 3 to explain "deductions not definitely related".  Since TurboTax automatically populates these lines after I enter my foreign income data from 1099's and k-1's, I have no idea what to enter for an explanation statement.  I don't know where TurboTax is getting these amounts from that show up on lines 2 and 3 of Form 1116.  TurboTax requires an explanation to complete the tax return.  What should I enter?

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1 Best answer
Expert Alumni
Apr 17, 2024 9:46:57 AM

Yes, you will need to find out what you entered for "expenses definitely related to the income on line 1a" and "deductions not definitely related" first as these are data entry fields.

 

Here's how to find out what was entered:

 

 

 

  1. Sign in to your TurboTax account.
  2. Select Deduction & Credits.
  3. Select Edit to the right of Foreign Tax Credit.
  4. Continue until you get to Do You Want the Deduction or the Credit? Select Take a Credit. 
  5. On the screen Elect the Simplified Method, select Other Calculation. 
  6. Continue until you get to Other Deductions Not Definitely Related. This is part of the information that you need. If there's a deduction listed, make note of it. If there are zeros filled in or meaningless entries like NA, or none, delete them and leave the fields blank. 
  7. Select Continue through the rest of the section and watch for any other deductions that may come up. 

If you didn't find any deductions while reviewing this section, but the request for an explanation comes up again in review, enter NA. 

 

1 Replies
Expert Alumni
Apr 17, 2024 9:46:57 AM

Yes, you will need to find out what you entered for "expenses definitely related to the income on line 1a" and "deductions not definitely related" first as these are data entry fields.

 

Here's how to find out what was entered:

 

 

 

  1. Sign in to your TurboTax account.
  2. Select Deduction & Credits.
  3. Select Edit to the right of Foreign Tax Credit.
  4. Continue until you get to Do You Want the Deduction or the Credit? Select Take a Credit. 
  5. On the screen Elect the Simplified Method, select Other Calculation. 
  6. Continue until you get to Other Deductions Not Definitely Related. This is part of the information that you need. If there's a deduction listed, make note of it. If there are zeros filled in or meaningless entries like NA, or none, delete them and leave the fields blank. 
  7. Select Continue through the rest of the section and watch for any other deductions that may come up. 

If you didn't find any deductions while reviewing this section, but the request for an explanation comes up again in review, enter NA.