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Where do I enter the foreign tax credit (Form 1116) or deduction?

by TurboTax Updated a day ago

To see when Form 1116 will become available in TurboTax, check form availability on this page.

Both the credit and the deduction are entered in the same place. Here's what you do:

Note: If your TurboTax navigation looks different from what’s described here, learn more.

  1. Open (continue) your return in TurboTax
  2. Enter all your foreign income in Wages & Income if you haven't already
  3. Select Search, enter foreign tax credit and select Jump toforeign tax credit
    • Or go to Deductions & Credits, and select Start next to Foreign Tax Credit under Estimates and Other Taxes Paid
  4. When you reach the screen Do You Want the Deduction or the Credit? select the option you prefer for your situation
  5. If you select Take a Credit:
    • Select Continue on the next screen, then select No to fill out Form 1116
    • When you reach the screen Country Summary, select Add a Country
    • Answer the questions about your foreign income, taxes, and expenses on the following screens
    • When finished, you'll be taken back to the Country Summary screen. If you have income from other countries to enter, select Add a Country. Otherwise, select Done
    • Answer the questions on the following screens until you reach your Foreign Tax Credit Summary. If you’re finished with this section, select Done
  6. If you select Itemized Deduction:
    • Enter your foreign taxes paid on the next screen. These should show up in the Deductions & Credits section of your tax return, under Other Deductible Expenses

In most cases, taking the credit works out better than the deduction. We'll help you decide which one's best for you when you go through this section.

If you choose to take the credit (most people do), we'll attach Form 1116, Foreign Tax Credit, if your situation requires it.

Note: Form 2555 (Foreign Earned Income Exclusion) calculates the amount of foreign earned income and/or foreign housing you can exclude from taxation. You won't be able to take a credit or deduction for taxes paid (or accrued) on excluded foreign earned income or housing. This is because excluded income and housing isn't taxed in the first place.

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