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    Foreign Tax Credit

    If a taxpayer has zero taxable income and thus no tax due, do they just lose the foreign tax that they paid that shows up on the brokerage statement?


    Linda F

    #2
    Yep

    It's a nonrefundable credit. The credit can't exceed their tax liability.

    So just explain to your client that they can actually use the credit if they pay some income tax.

    Then ask them how much tax they want to pay... and write out a Form 1040-V by hand...

    LOL
    Burton M. Koss
    koss@usakoss.net

    ____________________________________
    The map is not the territory...
    and the instruction book is not the process.

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      #3
      Too funny

      This client is too old and not doing well at handling financial affairs anymore. No explanation will be needed....just won't mention it at all.

      Linda F

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        #4
        Carryover

        Unused FTCs can be carried back one year and carried forward ten years. (Code §904(c) and §907(f))
        Roland Slugg
        "I do what I can."

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          #5
          Is it worth it?

          Originally posted by Roland Slugg View Post
          Unused FTCs can be carried back one year and carried forward ten years. (Code §904(c) and §907(f))
          Unless it is a large credit, it would probably cost more in tax preparation fees than the amount of the credit.

          Comment


            #6
            Originally posted by taxxcpa View Post
            Unless it is a large credit, it would probably cost more in tax preparation fees than the amount of the credit.

            Your tax program should carry it forward automatically, my programs prints out
            Form 1116 so fast, that I don't think I charge enough for the form.

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