Question

Foreign Tax Credit Form 1116

Forum|Forum|2 years ago
March 4, 2024
1 reply
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Have TT Premier, Joint Return, Standard Deduction, only have Foreign Taxes reported on 1099-DIVs, total amount is a little over $600. Since it's over $600 I'm suppose to fill out form 1116. Do not want to fill out form 1116. Can I change the amount on the 1099-DIV to less than $600 so I don't have to fill out form 1116 and still get some credit? Or can I change the 1099-DIVs foreign taxes to 0, therefore no form to be generated and no credit? Or do I report the Foreign Taxes on the 1099-DIVs and answer in the Foreign Tax Paid Section to use the tax as an itemized deduction, therefore, since I'm taking the Standard Deduction it has no effect and would get no credit.? Which is the best way to do it?

T

ThomasM125

The best thing to do would be to complete the Form 1116 section and take the credit that way. The IRS prohibits you from taking the credit without filing Form 1116 if your foreign taxes are over $600 and one would assume this would apply whether you report them as such or not. Also, if you enter your 1099 form incorrectly in TurboTax it may invalidate your accuracy guarantee from TurboTax. You wouldn't need to reduce the reporting on Form 1099-DIV to $0 if you didn't want to take the credit, as you won't get it if you report over $600 on the 1099 form and don't complete the Form 1116. The itemized deduction options won't help you on your federal return since you taking the standard deduction.

Here are steps to complete Form 1116 if you choose to do so:

First, you enter the Form 1099-DIV. Then go to the Estimates and Other Taxes paid section in the Deductions and Credits area of TurboTax to enter your foreign income, choose Foreign Taxes.

If your only foreign taxes were reported on your 1099-DIV or 1099-INT or similar statements, choose that option on the screen that says "Tell us About Your Foreign Taxes:

Indicate that you need to complete Form 1116 when asked. It's usually better to take the foreign "Credit" option over the "Deduction." Choose the countries you paid the taxes to:

Then report the income by country:

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T

Trekker1Author

I do not get the second screen shot that says Tells Us About Your Foreign Taxes. I get the following screens after choosing Foreign Taxes:

I don't see an option to not fill out the form. At this point the choice is Itemized Deduction or Take a Credit. If I take the Itemized Deduction my credit will be zero, because I take the standard deduction. I do not want the credit and do not see an option of not filling out Form 1116. Where is the option of not filling out the form?

Thanks.

AmyC

Employee

If you want to reduce the amount of foreign tax paid on your 1099-DIV entry, you can reduce it to $300 or $600 MFJ (or less) and not worry about the form 1116. For a few dollars, changing the DIV is easier 🙂

If you want to keep going and choose credit, you can.

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