Foreign Tax Credit

[oceanlovin'ea]

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

[Koss]

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

[oceanlovin'ea]

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

[Roland Slugg]

Carryover

Unused FTCs can be carried back one year and carried forward ten years. (Code §904(c) and §907(f))

[taxxcpa]

Is it worth it?

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.

[Gene V]

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.