Form 1116 categories - need help

[vivianthornhill]

I've been reading conflicting information on which categories should be used.

My foreign income from Canada:

Rental Income (I know that's Passive category)

Interest Income (Passive Category)

Distribution from RRIF (I think thats General Income) ?

CPP (Canada Pension Plan income - I think that would be under General Income along with the RRIF) ?

Only the Rental income and RRIF withdrawal income had taxes paid in Canada, but instructions say to include ALL foreign income, even if taxes werent paid in foreign country.

Another question regarding Form 1116:  For foreign gross rental income should I enter my net income?  I get a better tax credit that way instead of entering the rents received as income and then the expenses on the other line.  Thats how I was advised to do it last year, so am tempted to do it the same way although some people say that is wrong.  

Thank you

[MarilynG1]

Yes, you don't need to enter any Income in the Foreign Tax Credit section, unless you also paid Foreign Tax on that income.  This is to get you a credit for the foreign tax; all your income items are entered in the appropriate income sections in TurboTax.  

Your Canadian Pension Plan Income  and RRIF income will be reported in the Wages & Income section.  At the Income Topics list, scroll down to Retirement Plans & Social Security > Canadian Registered Pension Income.  Yes, any tax paid will be reported in the Foreign Tax Credit section as passive income.  Although you enter the pension amounts again, you are not being taxed again. 

Report your interest in the Interest & Dividends section, even if you don't have a 1099-INT.  If you didn't pay any Foreign tax, you don't need to enter this income in the Foreign Tax Credit section. 

Your Rental Income/Expenses are reported in the Rental Properties topic, for a Schedule E.  When claiming a credit for the tax, in the Foreign Tax Credit section, you are correct that this is reported as passive income.  You can enter the amount of rental income that you were taxed on in Canada and the amount of tax you paid.  You don't have to enter the gross income plus expenses, you can enter the net income without expenses, if that's what Canada taxed you on.  Depreciation is not included as an expense, which is why you probably got a better outcome entering the net income. Doing it the same way as last year is good for continuity, as long as you keep records of the amounts you used and why. 

Here's more info on Claiming the Foreign Tax Credit.

@vivianthornhill