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Form 1116 - carryover from previous years

PepeRoni
Level 1

I have a new client (retiree, filing jointly) who has been carrying over a $500 tax credit since 2014 in form 1116. Client does not have plans to open any business/investment overseas in the future.

Client only income is from retirement accounts (401k and Roth)

If no foreign income is generated in the future, when will the client be able to use the credit? by the client estate? is worth it for the client to keep track of the tax credit in form 1116?

(Note: client wants to stop filing 1116)

thanks.

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1 Solution

Accepted Solutions
itonewbie
Level 15

For which category of income does your client have a carryover?

Your client doesn't have to file a F.1116 for years no FTC is being claimed.  Carryover reported on F.1116 filed in a previous year will still be recognized.  You will still track that like you do with any other carryover in the workpaper for future reference.

If your client passes away prior to the carryover expiring, the last year it can be used would be the year your client is deceased.  By caselaw, carryovers generally die with the taxpayer since carryovers are attributable only to the taxpayer from whom they arose and aggregates between spouses are only allowed when joint filing election is in effect.

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Still an AllStar

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1 Reply 1
itonewbie
Level 15

For which category of income does your client have a carryover?

Your client doesn't have to file a F.1116 for years no FTC is being claimed.  Carryover reported on F.1116 filed in a previous year will still be recognized.  You will still track that like you do with any other carryover in the workpaper for future reference.

If your client passes away prior to the carryover expiring, the last year it can be used would be the year your client is deceased.  By caselaw, carryovers generally die with the taxpayer since carryovers are attributable only to the taxpayer from whom they arose and aggregates between spouses are only allowed when joint filing election is in effect.

---------------------------------------------------------------------------------
Still an AllStar

View solution in original post