Is there a requirement to report all of the foreign taxes paid on form 1116? I have both US source and foreign source passive income.
I am using a tax software program and just input the Cdn taxes paid, in the appropriate boxes for interest and dividend income. However, I have observed that if I claim less in foreign taxes, my FTC actually increases and my US tax is reduced.
I assume this is due to pecentage US/foreign, but I am confused as to what I should claim.
FTC How much to report
Moderator: Mark T Serbinski CA CPA
I won't comment on the vagaries of your tax software, but generally, the more foreign tax you report, the more credit you get, up tp the point that you reach the limit, at which point you are merely building up your carryforward.
But, you have no requirement to report any foreign tax if you don't want to, so inderreporting the tax is basically like not rpeorting a charitable donation.
I'd be rechecking your 1116 inputs however, particularly the upper portion which deals with which deductions are apportionned to foreign income, and which is not, as the behaviour of the form is questionable.
<i>nelsona non grata... and non pro</i>
But, you have no requirement to report any foreign tax if you don't want to, so inderreporting the tax is basically like not rpeorting a charitable donation.
I'd be rechecking your 1116 inputs however, particularly the upper portion which deals with which deductions are apportionned to foreign income, and which is not, as the behaviour of the form is questionable.
<i>nelsona non grata... and non pro</i>