TurboTax will neither carry forward nor carry back a foreign tax credit

[laurag25]

I am presently amending prior returns for 2023 and 2024 to correct for errors in my foreign dividend (passive) income. This, in turn, causes changes in the foreign tax credits. 

Filing 2024-X tells me I must carry back a specified sum to previous year. If I go into my 2023-X (which has now has the correct foreign income figure), am I supposed to claim an adjustment to foreign income? 

I have responded "yes" in the dialog box to signal that All of the following apply to my foreign income and expenses (of which, that I am claiming no adjustments to foreign tax credit amounts.) I answer "Yes" --  adjustments to the foreign tax carry over amounts are not necessary.

Instead, is this carryback from 2024 considered an adjustment?

Then, "Do you have a 2022 carryback adjustment?" No. (Don't know why it's asking me about 2022 carrybacks! That doesn't come into play here at all.)

"Do you have a carryback from 2024?" Yes. Then I add the amount. (My 2023-X foreign tax credit is more than double this carryback from 2024. )No Unusual Situations apply to me.

Then the process is finished.

But if I do a Smart Check, Ttax says "Check this worksheet" (from table 1116 "Foreign Tax Credit Comp Wks), on Table "Foreign Tax Credit Carryover Adjustments" the correct amount is listed at the very bottom as a carryback from 2024, but the carryover entries from previous years are BLANK (have been wiped out), so I cannot satisfy the conditions for entering 2024 carryback amount. (The wording is convoluted, but I leave it up to Ttax to interpret.)

This is on the downloaded DeskTop edition.

Do I have to go back into the worksheet and fill in by hand all the previous years' carryovers on the table "Foreign Tax Credit Carryover Adjustments" in order to fill in the carryback amount from 2024? These previous years' figures do appear in the other tables in the worksheet, they are missing only in the Adjustments table, and this is making it impossible to do the carryback.

[DaveF1006]

Yes, a carryback from 2024 is considered an adjustment to your 2023 foreign tax credit. Because you are amending 2024 at the same time, the 2023 program doesn't automatically know what happened in the 2024 file. It requires manual entry in that "Adjustments" table to bridge the gap. Now, follow these steps to correct the error and not cause the loop.

1. Switch to Forms Mode: In the Desktop version, click the Forms icon in the top right. 
2. Find the Worksheet: In the left-hand list, find the Foreign Tax Credit Comp Wks (Form 1116).
3. Locate the Carryover/Carryback Table: Scroll down to the table titled "Foreign Tax Credit Carryover Adjustments."
4. Manual Entry is Necessary: If the software deleted the previous year's carryover data in this specific table, you do have to re-enter it manually. 
5. Check your original (un-amended) 2023 return or your 2022 records.
6. Enter the carryover amounts from those years into the corresponding boxes.

Once the "running total" of previous years is present, the software will allow the 2024 carryback amount to sit at the bottom without triggering an error.

[laurag25]

The 2023 adjustments table could not be altered.

In fact, there is an extremely easy solution to this problem IF you are willing to forgo the carryback credit (which I am, already having a lot of carryover credits anyway). It suffices to let the 2023 Check for Errors procedure find the carryback -- "Check this Entry" error screen -- and just eliminate it manually from the table that is displayed.

Again, this is not for someone who wants to use that carryback credit.

According to Anthrop\c AI, this credit does not have to be taken and eliminating it here does not permanently eliminate your possibility to use the carryback credit in future returns. 

This may be more of a problem with the tax code rather than Turbotax, nevertheless one has to solve it in Turbotax.

Foreign Credit Carryovers are a real can of worms! It would be good if Turbotax just asked the question by default whether one wants to take the carryback credit or not.