In TurboTax Desktop, I have a message saying "Check this Entry": "Form 1116 (COPY 1)-- Explanation Stm: Detailed Explanation must be completed. Enter your explanation here to complete the required statement. It must show the other deduction items for line 3B column a." If I go to the form, line 3b says "other deductions (attach statement)" and a value of $14000. On the 1116 worksheet, this is listed as "remaining dedns from gross income". I haven't the foggiest idea where TurboTax got this number, so how am I supposed to explain it?
I went through my deductions and found one that exactly matched the amount, traditional IRA contributions, so I guess that's the explanation. Why TurboTax couldn't have figured that out, I don't know.
In my case the amount listed next to "Remaining dedns from gross income" was equal to the amount I put into my HSA (Health Savings Account). Agreed why doesn't TurboTax know that? And why is that on the Foreign Tax Credit Computation Worksheet? What does that have to do with foreign taxes? Is this a bug?
Hate doing 1116 it always needs a bunch of adjustments and clicking around in forms to make it work. I had the same issue and had to write in about HSA contribution and a CD early withdrawal penalty. This is one of those things where TT just gives up what to write probably because of all the different things that it could be, and asks the user to summarize it. The need for the deduction, I think, is Form 1116 does some sort of deduction calculation based on ratio of foreign source income over all income to determine how much of the tax you can claim back from a given country. A lot of gymnastics which just seem overly complicated. I have foreign tax deduction from prior years trapped as a carryover and can never figure out what will release it.
It is based on gross foreign income over total income. You can carryover foreign tax credit for 10 years before it rolls off.
ok thx so this carryover that's stuck - what scenario do I need to engineer to flush it out because every year I do the 1116 I have a couple of holdings from France and Switzerland but the math gymnastics works out so the max amount of the credit is usually close to the amount of the taxes paid this year and the carryover just keeps rolling over. Do I need some investment with a high amount of foreign income, but lower foreign tax rate?
BTW I also have investments for UK/Germany but these don't have tax withholding so I am not including that income. When I do 1116 I just isolate the France and Switzerland income/tax as my cols A and B.
That is an idea to get the income up.
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