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2020 Form 1116 disallowing full credit

DENNYCARR
Level 2

Only foreign income received in 2020 was $678 dividends.  Foreign tax paid in 2020 was $99.  Proseries 2019 did not use Form 1116 or limit foreign tax credit and had amounts similar to 2020.  Proseries 2020 line 24 is transferred automatically to line 33 then to Schedule 3, line 7.  Proseries 2019 does not transfer line 22 to line 31 and there's a note "DO NOT FILE FORM". I cannot find the difference between 2020 and 2019 except that in 2020 the credit is limited.  

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sjrcpa
Level 15

Find the place to elect out of using Form 1116.


ex-AllStar

View solution in original post

6 Replies 6
DTNY07
Level 5

Form 1116 is only needed when a single filer has $300 or more in foreign tax paid.  Married filing jointly = $600 or more.  That would be why Form 1116 wasn't used during 2019.  As far as the credit being limited. could be based on their overall tax liability.  Meaning if they don't even have $99 of tax liability, then they wouldn't use the whole $99 foreign tax credit

DENNYCARR
Level 2

Overall tax liability for 2019 was $1,027 with fully allowable foreign tax credit of $94.

Overall tax liability for 2020 was $1,462 with partially allowable foreign tax credit of $40. [out of $99 paid]

Maybe it's a glitch?  Thanks for replying!

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sjrcpa
Level 15

Find the place to elect out of using Form 1116.


ex-AllStar

View solution in original post

DENNYCARR
Level 2

I can find the Lacerte instructions but not the ProSeries Professional instructions on how to elect out of using Form 1116.

Is the only alternative in ProSeries to use Schedule A?

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DENNYCARR
Level 2

Sorry, found the checkbox on the Federal Information Worksheet titled "Foreign Tax Credit (Form 1116)".  Thank you!

sjrcpa
Level 15

You're welcome.


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