"Check This Entry" flags Form 1116

[cbco7]

I pay a small amount of foreign tax that is reported on a 1099-DIV, box 7. I entered this amount in the step-by-step, Personal Income/Dividend "Box 7 foreign tax paid".

The amount is well under the $300 threshold, and thus the IRS allows this amount to be reported on Sch. 3, line 1 "Foreign tax credit". TurboTax correctly created this schedule. In other words, no Form 1116 is required.

Nevertheless, TurboTax (H&B desktop) has flagged this foreign tax credit as an unresolved issue, still wants me to enter the data for Form 1116 through "Check This Entry", and apparently wants me to fill out the entire Foreign Tax Credit Comp Worksheet. TurboTax knows it compiled Sch. 3, it knows that there will be no carryover to future years from my Form 1040 entries (and thus again, no need for Form 1116), so why does it want user to go through a bunch of extra steps to complete Form 1116?

More importantly, is there a workaround so it will stop flagging Form 1116 as "incomplete", without user having to complete the Form 1116 worksheet and form? Since it already completed Sch. 3, should I just delete Form 1116 in the Forms menu? TIA for any help.

[ZoltanB45]

Did you try not adding the amount from box 7 and seeing whether it affects the refund amount? If it is only a few dollars, I would suggest deleting that from the 1099-Div. It might be worth not having to go through the 1116 inputs.  Not what you want to hear, but the entry for foreign tax paid will prompt further work needed.

[cbco7]

@ZoltanB45, thanks for the idea, I understand what you're suggesting but unfortunately it is a meaningful amount subtracted (since it's a credit carried over to Form 1040 line 20) from taxes due. 

[cbco7]

Okay, I figured out how to get rid of the Form 1116 error flag, and am posting the solution here in case it helps someone else. Caveat - this solution may not apply in every instance.

1. Go to Forms. If Form 1116 doesn't appear in the auto-generated list of forms, search for 1116.
2. Open a copy of Form 1116. (In my case, it says, "Form not required  to be filed" at the very top, along with "DO NOT FILE" in red under the year 2021 at the upper right side. In other words, TurboTax does recognize that the foreign tax paid amount entered from the 1099 is below the $300 threshold.)
3. Near the top of Form 1116, click on "Quick Zoom to Foreign Tax Credit Worksheet for data entry".
4. Scroll down to Part II "Foreign Taxes Paid/Accrued. Right below, click the "paid" checkbox. (Assumes that the user did indeed pay (vs. accrue) foreign taxes in 2021.)
5. TurboTax should give you a message in the gray area below the form that the error was cleared.

As an aside, I was unable to directly search for the 1116 Comp Wks worksheet, but for some reason it does appear, indented, right below the "SE Adj Wks" in the auto-generated list.

I think the original issue is the result of a programming glitch.

[cbco7]

UPDATE: My answer still applies for TurboTax 2022.

[Djverhoest]

Thank goodness I found this fix that worked. I could not even submit my return. Turbotax kept insisting that Line 33 on Form 1116 needed to be Blank as a fix to an error before I could file. It WAS!

Glad I found this.