Is there any way to work around the Oregon ASC 311 calculation error?

[ayalara]

Turbotax's handling of the federal foreign tax credit is just plain wrong. In their own words "Your foreign tax plus your current federal tax (and any additional federal tax paid for a prior year) cannot be more than $x...." Pages 71-72 of Oregon's OR17 doc say to use Oregon's allowed federal tax subtraction (not the actual federal tax) in the computations. This makes a huge difference when the federal tax subtraction is phased out due to high AGI. This error can cause an Oregon tax computation to be up to $300 too high and there appears to be no way to amend a return to correct the error.

[DaveF1006]

To clarify, are you using an online version of TurboTax or the software?

[ayalara]

Desktop Windows 11, but I expect that online will be the same.

[DaveF1006]

 Can you go to the forms mode in your return and locate Other Subs in your list of forms? Tell me what is listed in part C -Foreign Tax Subtraction Smart Worksheet per line item.

[ayalara]

The copy/paste is below.  It appears that since the info msg says "Your foreign tax plus your current federal tax (and any additional federal tax paid for a prior year) cannot be more than $x....", and my current federal tax is well over $8250, it simply hasn't tried to do anything.    I'd like to be able to amend this 2024 return because I have a lot of foreign tax and should be getting almost 10% of it back.  I prefer TurboTax's easy data entry features over other tax software but until there's way to do this I'll need to use something else.

Part C: Foreign tax subtraction smart worksheet
1 Enter maximum amount from table.                                                                              8,250
2 Enter federal tax liability subtraction (including Part B, Line 5 above)                            0
3 Subtract line 2 from line 1. If the result is 0, you cannot deduct your foreign
tax paid                                                                                                                                   8,250
4 Enter the amount of foreign tax you paid in 2024, but no more than $3,000
($1,500 if your filing status is married filing separately)
5 Enter the smaller of line 3 or line 4 and enter as subtraction code 311                         0

[DaveF1006]

To clarify, this looks like you are trying to take a deduction and not a credit.  Is that your intention?

[ayalara]

Yes, ASC-311 is a deduction.  See pages 71-72 of pub OR-17.   When the federal tax liability credit is phased out in accordance with Table 9 the cap for ASC-311 becomes $1500/$3000 (single/joint).  

[DaveF1006]

Because you’re on Desktop (Windows 11), you can use “Forms Mode”—something Online users don’t have. Here’s how you can get around the broken Smart Worksheet logic.

1. Switch to Forms Mode: Click the "Forms" icon in the top right.
2. Locate "Other Subs": In the list of forms on the left, find the Oregon Other Subtractions worksheet.
3. Find Part C (Foreign Tax Subtraction): * Look at Line 2. If TurboTax has auto-filled your total federal tax (e.g., $40,000) instead of your allowed subtraction ($0), this is the error.
4. Override the Line: * Right-click on Line 5 (the final subtraction amount).
5. Select Override (or press Ctrl+D).

Manually enter the amount you are entitled to (the smaller of your actual foreign taxes paid or the $3,000/$1,500 cap).

Can You Amend to Fix This?

Yes, you can. Despite what the software might imply, you are legally allowed to amend a return to claim a deduction you were entitled to but missed. Here are the steps.

1. Open your original 2024 return:
2. Go to the "Federal" tab (even though you aren't changing it).
3. On the left-side menu (or under the "Federal Taxes" tab at the top), select Other Tax Situations.
4. Scroll down to the bottom and select Amend a Return.
5. TurboTax will ask, "Did you already file your return?" Select Yes.
6. It will then ask, "What do you need to change?" Choose the option that says "I need to amend my state return only" (or choose "The IRS or state sent me a notice").
7. Select Oregon as the return to amend.
8. TurboTax will still walk you through federal screens. Do not change anything on the federal screens. Just click "Continue" or "Done" until you reach the State or Oregon section.
9. Once you are in the Oregon section, select "Amend an Oregon return" or "Review Oregon."
10. Apply the Correction:

• Find the ASC-311 (Foreign Tax Subtraction).
• As we discussed, if the interview/worksheet is still blocking you, switch to Forms Mode (top right).
• Locate the Schedule OR-ASC or the Other Subtractions Worksheet.
• Override the final subtraction line (Code 311) to the correct amount (up to $3,000 for Joint / $1,500 for Single).

Explain the Change: When prompted for an explanation, state: "Amending to claim Foreign Income Tax Subtraction (ASC 311) per OR-17 instructions; original return incorrectly capped subtraction based on total federal tax instead of allowed subtraction."

Once you complete this, print and mail your return to:

Oregon Department of Revenue, 

PO Box 14700

Salem, OR 97309-0930.