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Foreign Tax Credit

Forum|Forum|5 years ago
March 6, 2021
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I have only $18 in Foreign Tax Credit so Form 116 in not needed. Yet Turbo Tax keeps asking me to fill out that form when I do a final review.

Best answer by MayaD

You can choose each tax year to take the amount of any qualified foreign taxes paid or accrued during the year as a foreign tax credit or as an itemized deduction.

If you don't want to claim the credit follow the steps to delete form 1116 Foreign Tax Credit:

1. In the program, to your left,

2. Select Tax Tools, click on the drop down arrow

3. Select Tools

4. Under Other helpful links, choose Delete a form

5. Select Delete next to Form 1116 and Continue with My Return

If the form keeps coming back, revisit the foreign income section and claim the deduction instead of the credit.

To return to the foreign tax credit section to edit, here are the steps:

Open up your TurboTax account and select Pick up where you left off
At the right upper corner, in the search box, type in "foreign tax credit" and Enter
Select Jump to foreign tax credit
Follow prompts

R

rogge1722

Employee

In order for TT to use the exemption automatically, all the following conditions must hold:

* The total sum of foreign taxes entered on Forms 1099-INT, 1099-DIV, the Schedule K-1 Worksheets, and any manual entries made on the 1116 Computation Worksheet lines 8p and 8r1 doesn't exceed the $300/$600 limit.

* If there is a foreign tax amount on a Schedule K-1 Worksheet, the category of income selected is "passive category income".

* If a category of income box is checked on any Form 1116, the category checked is "passive category income".

* If a category of income box is checked on any Form 1116 Computation Worksheet, the category checked is "passive category income"

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* There is no amount entered on the Federal Information Worksheet for "Excludable income from Puerto Rico".

* There is no foreign tax credit carryover from another year that can claimed in this year.

M

MayaDAnswer

You can choose each tax year to take the amount of any qualified foreign taxes paid or accrued during the year as a foreign tax credit or as an itemized deduction.

If you don't want to claim the credit follow the steps to delete form 1116 Foreign Tax Credit:

1. In the program, to your left,

2. Select Tax Tools, click on the drop down arrow

3. Select Tools

4. Under Other helpful links, choose Delete a form

5. Select Delete next to Form 1116 and Continue with My Return

If the form keeps coming back, revisit the foreign income section and claim the deduction instead of the credit.

To return to the foreign tax credit section to edit, here are the steps:

Open up your TurboTax account and select Pick up where you left off
At the right upper corner, in the search box, type in "foreign tax credit" and Enter
Select Jump to foreign tax credit
Follow prompts

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S

ssffnn

When I chose to claim the the foreign tax paid as a Schedule A deduction item the money back is cut by more than half compared to claiming it as tax credit (on the current old Form 1116). Guess I'll have to remove the entry of 'foreign tax paid' on Form 1099-DIV. That way it would not 'force' me to make a choice between Schedule A deduction versus tax credit, and TT would not indicate error on Form 1099-DIV upon review (since it would no longer be showing any foreign tax paid). Then I may go ahead and remove Form 1116, and efile before the new Form 1116 (and Schedule B) come out (on March 31). After my tax file is accepted and processed I then file an amendment later with the new Form 1116 to claim the money back based on taking it as tax credit.

Please comment if this will work.

SN

DaveF1006

Yes this would work but you might want to wait until 03/10 when the form is available and 03/11 when the return will be able to be efiled. Don't remove the foreign tax amount from the 1099 DIV quite yet.

@ssffnn

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