- Go to the Input Return tab.
- Select Credits from the left menu.
- Select Foreign Tax Credit (1116).
- Select the country from the Name of foreign country dropdown list.
- Select the Category of income from the dropdown menu.
- Select Income from the left menu.
- Select Interest Income (1099-INT, 1099-OID).
- Enter the Name of Payer.
- Enter the interest income in Banks S&L, etc.
- Select the Details button to expand the input area.
- Scroll down to the Foreign Account and Foreign Tax Credit section
- Complete the information under Foreign Tax Credit subsection:
- Select the Name of foreign country (must be the same as selected in step 4).
- Select the Category of income (must be the same as selected in step 5).
- Enter the Percentage foreign (.xxxx) or amount, if different if applicable.
- Enter the Foreign income tax withheld (US dollars).
- Check the box Foreign taxes accrued if applicable.
- Enter the Date paid or accrued.
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12-05-2019
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This article will help you enter foreign taxes paid (or withheld) to calculate the foreign tax credit on Schedule 3, Line 1.
If you are looking for how to enter K-1 foreign taxes on an individual return (Form 1040), see here.
Before you start
- There are six methods for entering foreign taxes paid, depending on the type of income the taxes are associated with.
- For ProConnect to calculate the Credit for Foreign taxes paid, an entry in US Dollars must be made. Entries under the Foreign Currency section won't generate a credit.
- ProConnect can't convert foreign currency amounts to US dollars, so any currency conversion must be done outside the program.
Select a type of income below to view step-by-step instructions
Interest income
Dividend income
- Go to the Input Return tab.
- Select Credits from the left menu.
- Select Foreign Tax Credit (1116).
- Select the country from the Name of foreign country dropdown list.
- Select Category of income from the dropdown menu.
- Select Income from the left menu.
- Select Dividend Income (1099-DIV).
- Enter the Name of Payer.
- Enter the dividend income in Total Ordinary Dividends.
- Enter any qualified dividends in Qualified dividends.
- Enter any capital gains in Capital Gain Distributions.
- Click the Details button to expand the input area.
- Scroll down to the Foreign Tax Credit section and complete the information there:
- Select the Name of foreign country (must be the same as selected in step 4).
- Select the Category of income (must be the same as selected in step 5).
- Enter the Percentage foreign (.xxxx) or amount, if different if applicable.
- Enter the Foreign income tax withheld (US dollars).
- Check the box Foreign taxes accrued if applicable.
- Enter the Date paid or accrued.
Partnership income (1065 K-1)
- Go to the Input Return tab.
- Select Credits from the left menu.
- Select Foreign Tax Credit (1116).
- Select the country from the Name of foreign country dropdown list.
- Select the Category of income from the dropdown menu.
- On the left-side menu, select Income.
- Select Partnership Info (1065 K-1).
- Select Line 16 - Foreign Transactions from the left-side menu.
- Select inside on the Foreign tax withheld field.
- Select the plus sign (+) button to open the detail field.
- Select the Form 1116 Name or Number. This should match the country you selected on the 1116 screen in step 4.
- Enter the Partner's foreign gross income.
- Enter the Foreign tax withheld (US Dollars).
- Enter the Date paid or accrued.
- Select the Type of income withheld on.
- Select OK to return to the input screen.
S-Corporation income (1120S K-1)
- Go to the Input Return tab.
- On the left-side menu, select Credits.
- Select Foreign Tax Credit (1116).
- Select the country from the Name of foreign country dropdown list.
- Select the Category of income from the dropdown menu.
- On the left-side menu, select Income.
- Select S-Corp Info (1120S K-1).
- Select Line 14 - Foreign Transactions from the left-side menu.
- Select inside on the Foreign tax withheld field.
- Select the plus sign (+) button to open the detail field.
- Select the Form 1116 Name or Number. This should match the country you selected on the 1116 screen in step 4.
- Enter the Shareholder foreign gross income.
- Enter the Foreign tax withheld (US Dollars).
- Enter the Date paid or accrued.
- Select the Type of income withheld on.
- Select OK to return to the input screen.
Estate or Trust income (1041 K-1)
- Go to the Input Return tab.
- On the left-side menu, select Credits.
- Select Foreign Tax Credit (1116).
- Select the country from the Name of foreign country dropdown list.
- Select the Category of income from the dropdown menu.
- On the left-side menu, select Income.
- Select Estate or Trust info (1041 K-1).
- Select Foreign Transactions from the left-side menu.
- Select inside on the Foreign tax withheld field.
- Select the plus sign (+) button to open the detail field.
- Select the Form 1116 Name or Number. This should match the country you selected on the 1116 screen in step 4.
- Enter the Partners foreign gross income.
- Enter the Foreign tax withheld (US Dollars).
- Enter the Date paid or accrued.
- Select the Type of income withheld on.
- Select OK to return to the input screen.
Business income (Sch C)
- Go to the Input Return tab.
- On the left-side menu, select Credits.
- Select Foreign Tax Credit (1116).
- Select the country from the Name of foreign country dropdown list.
- Select the Category of income from the dropdown menu.
- Scroll down to the Foreign Taxes Paid or Accrued section.
- Enter the Date paid or accrued.
- Locate the US Dollars subsection.
- Enter the amount of foreign taxes in Other foreign taxes.
- On the left-side menu, select Income.
- Select Business Income (Sch C).
- Select Foreign Income Information.
- Select the Form 1116. This should match the country you selected on the 1116 screen in step 4.
- Enter the Percentage foreign if not 100%, if applicable. If left blank, the program assumes 100% of the income in this activity is foreign.
Other Income
- Go to the Input Return tab.
- On the left-side menu, select Credits.
- Select Foreign Tax Credit (1116).
- Select the country from the Name of foreign country dropdown list.
- Select the Category of income from the dropdown menu.
- Scroll down to the Gross Income Within Country section.
- Locate the Other Foreign Source Income subsection.
- Enter the income in Income (Click on button to expand).
- Scroll down to the Foreign Taxes Paid or Accrued section.
- Locate the US Dollars subsection.
- Enter the foreign taxes paid or withheld in Other foreign taxes.
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