Form 1116 - Explanations

Forum|Forum|5 years ago
July 9, 2020
1 reply
0 views

The form 1116 and 1116 Copy 1 shows an error. T. Tax is asking for Explanation statements for Line 3 A, 3 B and 3 C. These are Deductions not related to the foreign source income.

What exactly is the software asking ? Can you help ?

Best answer by rogge1722

From TT's on demand guidance:

Lines 3a and 3b, deductions not definitely related:

Some deductions on your return may not definitely relate either to your foreign income on line 1 or your U.S. source income. Some examples of these deductions might be medical expenses that you deducted on Schedule A, line 4, or alimony that you paid and deducted on Schedule 1 (Form 1040), line 18a. These types of deductions need to be entered on lines 3a or 3b on the Foreign Tax Credit Computation Worksheet.

If you don't itemize your deductions, your standard deduction will automatically be brought to Form 1116.

Describe on the explanation statement what the deduction was for such as the examples given above.

rogge1722Answer

Employee

From TT's on demand guidance:

Lines 3a and 3b, deductions not definitely related:

If you don't itemize your deductions, your standard deduction will automatically be brought to Form 1116.

Describe on the explanation statement what the deduction was for such as the examples given above.

dhirenk2003Author

Yes, it has picked up my Std deduction for line 3 (a) and Schd 1 deduction amount for Other Deductions line 3 (b)

So I should list out these deductions in the Expl statement, is that correct ?

Thanks

arpatel

Line 3b in 1116 is wrong. Look at the instructions for 1116, line 3b should relate to foreign deductions, not IRA, not HSA, not Self Employment tax which are all US based. As a result, you would allowed a smaller tax credit, and end up paying more tax. In my case, the Intuit error would have cost me thousands of dollars.