Foreign tax credit

Forum|Forum|4 years ago
February 6, 2022
2 replies
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I am ready to file but my return is not reflecting my foreign tax credit. I know Form 1116 won't be ready for another couple of weeks or so. Is there any workaround? I seem to recall Form 1116 is not always needed to claim the credit.

TurboTax Premier Online

Best answer by DanaB27

Yes, you can elect to claim the credit for qualified foreign taxes without filing Form 1116 if you meet all of the following requirements:

All of your foreign source income is passive income, such as interest and dividends, provided that any dividends came from stock you owned for at least 16 days.
All of your foreign source income and the foreign income taxes are reported to you on a qualified payee statement, such as Form 1099-INT, Form 1099-DIV, or Schedule K-1 from a partnership, S corporation, estate or trust, and,
The total of your qualified foreign taxes isn't more than $300 (not more than $600 if married filing jointly).

But if you claim the credit without filing Form 1116, you can't carry back or carry forward any unused foreign tax to or from this year.

DanaB27Answer

Yes, you can elect to claim the credit for qualified foreign taxes without filing Form 1116 if you meet all of the following requirements:

All of your foreign source income is passive income, such as interest and dividends, provided that any dividends came from stock you owned for at least 16 days.
All of your foreign source income and the foreign income taxes are reported to you on a qualified payee statement, such as Form 1099-INT, Form 1099-DIV, or Schedule K-1 from a partnership, S corporation, estate or trust, and,
The total of your qualified foreign taxes isn't more than $300 (not more than $600 if married filing jointly).

But if you claim the credit without filing Form 1116, you can't carry back or carry forward any unused foreign tax to or from this year.

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lotter54

When will turbo tax update the foreign tax credit forms? The IRS has said that they have released the final forms.

DoninGA

Employee

@lotter54 wrote:

When will turbo tax update the foreign tax credit forms? The IRS has said that they have released the final forms.

Form 1116, Foreign Tax Credit for tax year 2021 is estimated to be finalized and available in TurboTax on 03/03/2022

Go to this TurboTax website for IRS forms availability - https://care-cdn.prodsupportsite.a.intuit.com/forms-availability/turbotax_fed_online_individual.html

frjohntroy

If the Form 1116 is ready (I assume it is from seeing the q and a), I am still having a problem. I list the four countries from which I received dividends and had foreign tax withheld, but the forms do not let me completer the entries and don't show the credit afterwards in my entered details. (I downloaded the transactions from my broker)

cjlangAuthor

I had already entered the 1099-DIV with the foreign taxes withheld amount before the Form 1116 was ready. The foreign tax credit was not registering when I next reopened my return. I went back and revisited that 1099-DIV and went through the steps again. When I got to the end of that series of questions, including source, whether I wanted to take it as a deduction or credit, etc., the tax credit registered on my 1040. Hope this helps.