Foreign Tax Credit

[S T]

Working on a dependent return (claimed as dependent on parent return), filing form 8615 for the dividends and capital gain taxed at parent rates - Age 19 college student.

Dependent's investment income reports shows foreign tax paid at source on the 1099 DIV forms,

Is there any restriction for the dependent claiming the "foreign Tax Credit" on their return? I can't find a reference to it.

Due to prior suspended Foreign tax credit carryovers, plus 08 foreign tax credit, If I can claim the foreign tax credit on the dependent's return - it will effectively reduce the tax liability to almost -0-

Thanks,

Sandy

[Elsyie]

I've seen several returns with the same situation. We have not found any restrictions on this and have reduced our clients tax to $0 in several of these situations.

[S T]

Ftc

Elysie thank you for your response and confirmation.
I don't prepare many of these scenarios and using form 8615, so sometimes, one just questions themselves as to whether or not it is correct.
Sandy

[FEDUKE404]

Same rules for student?

I'm also not aware of any special limits for a dependent using the foreign tax credit.

That kid must be in an unusual situation to have foreign tax credits requiring Form 1116 in the first place. I'm assuming reasonably low (student) income with much "foreign" (investment) income??

You need to be extremely careful of how you use the carryforward/carrybackward tax credits on Form 1116, as there is a very specific pecking order for each year when the original foreign taxes were actually paid. And you must attach a statement to the tax return showing how you derived any such total numbers.

Working on some segments of Part III of Form 1116 can be quite unnerving, to say the least!!

FE