Question

Form 1116, 1099-INT, and the foreign tax credit. Thank you!

Forum|Forum|5 years ago
March 7, 2021
1 reply
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Hello, and thank you for considering my question.

I have a bank account in Sweden. In 2019 I entered my Swedish bank interest income in the Interest on 1099-INT section. It totaled less than $300. I then entered taxes withheld on that interest and had no trouble getting the foreign tax credit for it.

For 2020, my Swedish bank interest exceeded $300. That, I believe, activates form 1116. So I'm being prompted to enter my foreign tax paid information into its form 1116 worksheet. So far, so good. But then the program is denying me any of the foreign tax credit. Is that because I put the Swedish bank interest in the Interest on 1099-INT section? Do I need to put the interest income in the 1116 worksheet instead in order to get the foreign tax credit, or perhaps do something else?

Thanks again most sincerely for reading!

R

rogge1722

Employee

I suggest going thru the interview instead of entering data directly into the worksheet. Here is the path:

Deductions and Credits, Estimate and Other Taxes Paid, Foreign Taxes

1

1967jeff1967jeffAuthor

Thank you, rogge1722, for your kind reply.

I did as you recommended, but unfortunately the "Your tax breaks" screen in Turbo Tax still shows that I get $0 in foreign tax credit for 2020.

When I was going through the interview screens as you suggested, it seems like I wasn't given the opportunity to enter the interest income that applies to the foreign tax paid. So I could see how Turbo Tax would think that since there was no income associated with foreign tax paid, I shouldn't get any foreign tax credit. Hmmm.

Another thing happened as I re-went through the interview screens. A "First Year You are Eligible?" screen popped up giving me three choices related to some sort of "Simplified Limitation Election Eligibility." I have no idea what to choose.

But again, the big issue is how to get the foreign tax credit. Perhaps someone else could help.

I'm grateful for your having read about my issue. Thank you!