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From 1116 and Schedule E

 
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carrcepeda



Joined: 31 Jul 2013
Posts: 3

PostPosted: Wed Jul 31, 2013 8:31 pm    Post subject: From 1116 and Schedule E Reply with quote

I live in Usa and I have rental income from overseas.

I filled out Schedule E for the foreign rental income for which I pay income taxes in the foreign country.
Now I wish to fill out form 1116, the foreing tax credit.

1) What should I wirite on line 1a of 1116 (gross income) ? Should I copy the amount from line 3 of Schedule E, that is the total rent I received before subtracting any expenses? Or should I copy the amount from line 26 of Schedule E, (or line 17 of 1040) which is the received rent less the expenses?

2) for this rental income should the amount reported on line 3d of 1116(gross foreign source income) be the same as the amount on line 1a ? Or what should it be?

3) What should I write on line 2 of 1116 (expenses definitely related to the income on line 1a) ? Should I copy the amount from line 20 of Schedule E, that is the total expenses ( insurance, repairs, etc) , or should I leave this line empty?

Anyh other suggestion?

Thanks
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nelsona



Joined: 27 Oct 2004
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PostPosted: Thu Aug 01, 2013 9:39 am    Post subject: Reply with quote

1) for the purposes of 1116, the term "Gross" means the the the income that is included in your gross income on line 22 of your 1040, so it is your NET income for things like renatl income, pension income, etc;

So, for renatl income, you would use the (positive) amount you reported on line 17 of 1040.

2) it is the portion of line 22 that is foreign. In your case it would be the same ammount you reported on line 1a of 1116.

Your question #2 is telling me that you are not using software to do 1116. Do not do this form by hand. Let the software make thse choices, one you fill out 1a.
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nelsona



Joined: 27 Oct 2004
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PostPosted: Thu Aug 01, 2013 9:40 am    Post subject: Reply with quote

3) 3 is zero.
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carrcepeda



Joined: 31 Jul 2013
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PostPosted: Fri Aug 02, 2013 4:00 pm    Post subject: Reply with quote

Thank you very much.

I have another question regarding line 3e of 1116 ( gross income from all sources).

On this line 3e we must add up all the gross incomes.
What is the gross rental income that must be added to this line? The income reported on line 3 of Schedule E ( rent before subtracting expenses) or the income reported on line 1a (and 3d) of 1116 ( rent after subracting expense)?

I use TurboTax Deluxe to prepare my tax return including 1116.
But for 1116 Turbo Tax goes thru an interview and asks me to enter " gross income", " expenses", etc.. Turbo Tax does not make cnoisces itself.

The exception is line 3e of 1116 where TurboTax on its own chooses as a addend to the sum the gross rental income reported on line 3 of Schedule E ( rent before expenses).
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nelsona



Joined: 27 Oct 2004
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PostPosted: Fri Aug 02, 2013 4:37 pm    Post subject: Reply with quote

Turbo is working fine. If you feel better, use the gross and expenses from schedule E on line 1a and line 2 respectively.

choose whichever gives you the bigger credit, and then stick with this in future.

If you are not getting all your Cdn tax (from your 216 return) as a credit, you should consider using CCA in Canada to reduce your Cdn tax. You don't wnat any carryforward.
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carrcepeda



Joined: 31 Jul 2013
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PostPosted: Mon Aug 05, 2013 6:36 pm    Post subject: Reply with quote

Thanks, Mr. Nelsona,

it gives me the bigger credit if I put:

Line 17 of 1040 into line 1a and 3d of 1116 (rent after expenses)
and
zero into line 2 of 1116
and
Line 3 of Schedule E as an addend into line 3e of 1116 (rent before expenses)

But is it correct?
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nelsona



Joined: 27 Oct 2004
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PostPosted: Mon Aug 05, 2013 9:07 pm    Post subject: Reply with quote

No. If line 3 is gross, then line 1 has to be gross and line 2 expenses
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hello3520



Joined: 01 Apr 2014
Posts: 7

PostPosted: Wed Apr 02, 2014 12:53 pm    Post subject: Reply with quote

If I put the total expense from Schedule E on Line 2 of 1116, do I need to back out the interest expense and include it on line 4b using the interest calculation?
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jacelulyc



Joined: 10 May 2014
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PostPosted: Sat May 10, 2014 6:31 am    Post subject: Reply with quote

the income reported [url=http://www.mmogos.com/TheElderScrollsOnline/]eso gold[/url] on line 1a (and 3d) of 1116 ( rent after subracting expense)?
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