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Chuckwi
New Member

Form 1116 lists over 10 years of foreign tax credits that never get applied and then expire. No AMT involved. Since TT does not properly capture and apply such credits to lower my US taxes, how can I force manually to apply?

Form 1116 lists over 10 years of foreign tax credits that never get applied and then expire. No AMT involved. Since TT does not properly capture and apply such credits to lower my US taxes, how can I force manually to apply?

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1 Reply
AmyC
Expert Alumni

Form 1116 lists over 10 years of foreign tax credits that never get applied and then expire. No AMT involved. Since TT does not properly capture and apply such credits to lower my US taxes, how can I force manually to apply?

If you have the desktop version, you can go into Forms Mode and override things. This will void your accuracy guarantee.

 

Schedule 3 line 1 holds the number from the 1116 line 35. The carryovers show in part III and come down to part IV for the final calculation. You can only use carryover amounts after current year is used. The IRS Topic No. 856 Foreign Tax Credit | Internal Revenue Service states:

 

 If you use Form 1116 to figure the credit, your foreign tax credit will be the smaller of the amount of foreign tax paid or accrued, or the amount of U.S. tax attributable to your foreign source income. Compute the limit separately for passive income, income resourced under a tax treaty, section 901(j) income derived from sanctioned countries, income included under section 951A, foreign branch income, and all other income. If you use Form 1116 to figure the credit, your foreign tax credit will be the smaller of the amount of foreign tax paid or accrued, or the amount of U.S. tax attributable to your foreign source income. Compute the limit separately for passive income, income resourced under a tax treaty, section 901(j) income derived from sanctioned countries, income included under section 951A, foreign branch income, and all other income. 

 

It may be you are using a deduction in the current year. Pub 514 states:  If you deduct qualified foreign taxes in a tax year, you cannot use a carryback or carryover in that year. That is because you cannot take both a deduction and a credit for qualified foreign taxes in the same tax year.

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