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Line 33 on the 1116 is not picking up the calculated amount on Line 22, but rather the maximum credit from Line 14. Therefore credit carried to Line 1 on Schedule 3 is overstated. Seems incorrect to me - is there a law change I don't know about or is the software wrong?
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No change to the law. Is that for passive income, how much is the foreign tax, is the foreign tax reported on a 1099, and does the taxpayer have any other types of foreign source income?
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Yes, it was simply 1099-DIV foreign tax of $294; calc allowed $219 per 1116; $294 entered on Line 33 and carried to Sch. 3; no other foreign income from other 1099-DIVs; pretty vanilla FTC calculation that ProSeries seems to have come to a wrong answer.
Thanks,BE
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From your response, I deduce that your client has no foreign source income other than what's on the 1099-DIV.
Given the amount, your client will qualify for §904(j), which allows him/her to claim foreign tax credit without filing a F.1116 and without regard to the limitation that would otherwise apply.
This is an election that does not require a statement to be attached to the return - you client can simply claim that as a credit on Sch 3, limited to the smaller of the foreign tax from the 1099-DIV or regular tax on the return. If it is limited by regular tax, however, there will still be no FTC carryback/carryover to other years.
Still an AllStar