All of a sudden, in the last week or so the software is not taking full credit for foreign tax paid on investments...little amounts that always were credited 100% are being adjusted to partial credit with carryover. What am I missing??
I avoid the 1116 whenever possible. It doesn't always allow the full amount of credit, because the foreign rate can be higher than the US rate. You are probably just experiencing this now because the clients who show up this time of tax season are different from those who came earlier.
If it's under the $300/$600 limit, just enter it directly on Schedule 3. If it's over, but not by much, just claim the limit. A year or so ago I had a client with $641 of foreign tax withheld on dividends, and I entered it without the 1116 just to see what would happen. IRS reduced it to $600.
Enter your E-mail address. We'll send you an e-mail with instructions to reset your password.
