Unused Foreign Tax Paid Form 1116 Line 10

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speer1234
Posts: 10
Joined: Thu Mar 21, 2019 6:10 pm

Unused Foreign Tax Paid Form 1116 Line 10

Post by speer1234 » Thu Mar 21, 2019 6:15 pm

For Foreign Tax Credits on Form 1116 Part III line 10, do you have to actively calculate carry forwards of unused foreign taxes paid year? Or is this only necessary if you will be using carry forwards against US tax for that year? Ive had Unused foreign tax for the past 5 years and have always left line 10 blank.

For example, if my 2008 credit limit is $600 and I paid $800 in foreign tax I would have $200 of Unused foreign tax. If my 2009 credit limit is also $600 and I paid $700 in foreign tax I would have an additional $100 of Unused foreign tax from 2011.

I cannot carry the $200 of unused foreign tax from 2008 to 2009 because I have no excess limit in that year and would leave line 10 blank. If for example 2011 my credit limit was $550 and I paid $400 in foreign tax I could carry Unused foreign tax to this year and would enter $100. Is this the right approach?

Image example: https://i.imgur.com/QdT4BEc.jpg

speer1234
Posts: 10
Joined: Thu Mar 21, 2019 6:10 pm

Re: Unused Foreign Tax Paid Form 1116 Line 10

Post by speer1234 » Fri Mar 22, 2019 12:40 am

talked to an accountant he said: "You can include on your current year return. You would need to attach a statement to show how much excess taxes have been carried over from various years"

This means I dont have to amend 5 years worth of taxes to fix line 10 on form 1116 on each for the carry over amounts. This makes things much easier for me.

graubart
Posts: 29
Joined: Thu Dec 15, 2011 6:22 pm

Re: Unused Foreign Tax Paid Form 1116 Line 10

Post by graubart » Sun Mar 24, 2019 10:13 am

I can't point to a source but my understanding is that the IRS doesn't want to see your carryover unless and until you want to use it.

I keep track of it in a spreadsheet in case I ever need to use it. If you ever need it you could then follow your accountant's advice.

nelsona
Posts: 15980
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Re: Unused Foreign Tax Paid Form 1116 Line 10

Post by nelsona » Sun Mar 24, 2019 1:06 pm

You are supposed to produce a statement each year. Your software does it, and it is sent with your return, even electronically .
I never recommend doing 1116 without software.
If you are having to produce a 1116, why not do a correct one.
Nelsona Non grata. Non pro. Search previous posts. Happy Browsing :D

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