Foreign tax credit carryover

Forum|Forum|2 years ago
March 19, 2024
2 replies
0 views

According to IRS 514 Pub, disallowed foreign tax credit from one year can be carried over.

https://www.irs.gov/publications/p514#en_US_2022_publink[phone number removed]

If you choose to take the foreign tax credit, and the taxes paid or accrued exceed the credit limit for the tax year, you may be able to carry over or carry back the excess to another tax year. (See Limit on the Credit under How To Figure the Credit, later.)

When I took foreign tax credit for 2023, the Turbotax software did not give me an option to carry over excess/disallowed credit amount. It only gives option to carry back. I do not want to carry back.

btw, I understand the calculation done for how much credit is allowed for the current year. So, the question is only about how do I ensure that excess is recorded as carryover in the TT software. I use TT premier desktop Windows 11 version.

The telephone support person asked me to go to a CPA. However, the IRS guidelines are stated above and this is about the software code question and not about the tax advice.

Best answer by DaveF1006

Yes, to ensure you receive a foreign tax carryover into 2024, switch to the forms mode in your program. Now locate 1116 Comp Worksheet in the left pane on your screen. it should be in the menu path directly below Form 1116 (copy XX).

Scroll toward the bottom of the worksheet when it appears to see if there is a carryover into 2024. Please see the screenshot below.

Mike9241

The foreign tax credit does not allow taxpayers to “opt out” of the carryback, However, you will not have a carryback in either of these conditions. 1) No foreign income of the same category in the previous year. 2) you already have fully utilized the maximum in the prior year or and thus have a carryforward or perhaps zero

https://www.irs.gov/pub/irs-pdf/p514.pdf