Additional Foreign Tax Credit on U.S. Income worksheet Publication 514

Forum|Forum|1 year ago
December 23, 2024
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Hi there. I am a US citizen tax resident in the UK. I am taxed in the UK on my US source income, subject to the taxing rights assigned to the US under the US-UK tax treaty. Under the treaty, the US agrees to provide a US tax credit to US citizens in respect of UK tax in excess of what the US may tax a UK resident non-US citizen (0% on interest, 15% on dividends). Any otherwise US source interest and divdend yielding US tax in excess of that amount is resourced. IRS Publication 514 provides a worksheet to calculate the additional foreign tax credit permitted and instructs the taxpayer to "Add this amount to line 12 of Part III and line 32 of Part IV of Form 1116".

How do I do this in turbo tax without override values?

Thank you in advance

TurboTax Home & Biz Windows

pk12_2

Employee

@mdsaronson ,

(a) in general , when the US is limited by treaty to specific tax rates, it is usually achieved by "adjustment" to the "foreign source" income. TurboTax has a screen for this. And IRS instruction for form 1116 provides the adjustment amount to be used. Should not use "over-ride" as this may ( not always ) disallow e-filing.

( b) If you are talking about 2024 tax year, many screens associated with Foreign source income / taxation are not operational yet --- think they are targeting for Jan 18th ( or thereabout ) to effective.

Does this help or am I in the total left field ?

mdsaronsonAuthor

Thanks @pk12_2 . I think my issue is slightly different. The instructions to Form 1116 for 2023 include the following paragraph at the bottom right of page 2:

U.S. citizens living in certain treaty countries may be able
to take an additional foreign tax credit for foreign tax imposed
on certain items of income from the United States. See Tax
Treaties in Pub. 514 for details. If this applies to you, use the
worksheet near the end of Pub. 514 to help you figure this
additional credit.

The instructions for the worksheet in Publication 514 contain the following instructions (for the third step in the calculations) link here - Pub 514 (worksheet is on p.43, instructions on p.44):

There does not seem to be a place in TurboTax where I can add the Line 21 amount to the reduction in foreign taxes on Part III, line 12 or where I can add that amount to Part IV, line 32.

Very much appreciate your time and assistance!

mdsaronsonAuthor

One more quick addition here. There actually is a space for one to enter this information on the TurboTax Foreign Tax Credit Computation Worksheet, snippet below, but the field is not active. The text instructs one to see tax help, but I cannot find instructions in the help section.