Foreign tax credit carryover less than $300 with a net loss

[martoro]

Hello. I'm filing a tax return for a minor with an UTMA account to make use of a capital loss after exchange last year (VTWAX -> VTSAX,VTIAX). The international stock fund (VTIAX) has a small amount of foreign taxes paid, but because the account has a net loss it cannot be used. My understanding is that I can carry it forward. However, because the foreign taxes paid is less than $300 Turbotax refuses to generate form 1116. How can I make Turbotax generate 1116 to take advantage of the foreign taxes paid in a later year? I will be able to use the capital loss from last year for several years so if not resolved this issue will stand next year as well. Thanks!

(As an aside, what does carryback mean? Foreign taxes can be carried back 1 year which baffles me.)

[martoro]

After a lot of clicking I managed to coerce a 1116 form from turbotax. As expected FTC is $0. So I have excess foreign taxes of the foreign taxes paid amount. But why doesn't Turbotax generate the carryover? It says the foreign taxes paid were utilized, sets $0 for carryover, but leaves and editable field for carryback. Can someone help please? I've spent way too much time on this and it should be allowed to be carried forward as far as I can tell.

[rogge1722 · Accepted solution]

If the exemption cannot be used in whole or in part, by default it will be lost.  The workaround is to elect not to use the exemption.  Here is the technique.

Go thru the foreign tax credit interview.  Then open the Federal Information Worksheet .  Scroll down to Part 6. The fifth paragraph is labeled  “Foreign Tax Credit (Form 1116).  Checkmark the box to file form 1116.

 Then bring up the foreign tax credit comp. worksheet. Scroll down to the bottom to the carryover section and you should see the credit carried over to 2023.

[martoro]

Wow! This really did it. I can't believe I didn't find this solution anywhere else after a ton of searching.

By exemption I suppose you mean FTC (foreign tax credit)? I am not sure how you deselect it. The way I did it is I deselected the statement that says something to the effect of "I don't have previous years carryovers" (in the Foreign taxes interview). This generated the carryover worksheet. And after going through your steps it generated form 1116 and schedule B with the carryover for next year.

Thank you very much!