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Whether you’re an experienced do-it-yourselfer or doing your own taxes for the first time, this is your place to learn and share. Here you’ll find information and resources for using H&R Block’s online and software DIY solutions. You’ll also find links to more information to assist you on your DIY journey.

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Valued Pioneer
Posts: 3
Registered: ‎03-04-2018
Accepted Solution

Foreign Tax income > $600 - credits not working

I'm having an issue getting the proper calculations done with foreign tax credits from passive income over $600. These require form 1116 to be completed. If I enter an amount under $600 on my 1099-DIV form, it eliminates the need for 1116 and populates form 6251 line 32 (AMT Foreign Tax Credit correctly) which gets back onto my 1040 to reduce my tax. 

 

If I put in the > $600 amount on my 1099-DIV and then complete 1116 with that amount as well, it does not carry forward to form 6251 line 32. Any ideas on what I'm doing wrong? It is almost like the 1116 form is not linking properly back to 6251.

 

Thanks. 

Pioneer
Posts: 2
Registered: ‎03-11-2018

Re: Foreign Tax income > $600 - credits not working

Did you figure out? its not working for me too!Smiley Sad

Pioneer
Posts: 2
Registered: ‎03-11-2018

Re: Foreign Tax income > $600 - credits not working

OK  Found it...

 

You have to manually create new copies of Form 1116 with AMT box checked and enter it from AMT perspective!

Valued Pioneer
Posts: 3
Registered: ‎03-04-2018

Re: Foreign Tax income > $600 - credits not working

Yes, that is what I discovered as well. It certainly wasn't straightforward to figure that out. 

Associate (Pioneer)
Posts: 65
Registered: ‎02-26-2018

Re: Foreign Tax income > $600 - credits not working

Hi jpenright,

 

It looks like you solved what you were looking for, but I just wanted to give you some additional information on top of Girishaccord’s suggestion.

 

The relationship between the AMT and the foreign tax credit isn’t always as straight forward as just using the foreign tax credit you claimed. If you have less than $600, then that figure is claimed directly on your 1040 and form 6251 will simply use that number. However, if the foreign tax credit claimed is more than $600, additional steps are required to see if you will need to complete line 32.

 

As the instructions for 6251 state, if the line 34 amount (which is your tax liability minus your foreign tax credit) is less than line 31 (your foreign earned income exclusion or the capital gains computation from 6251, Part III, OR a standard number based on your filing status), then you do not complete line 32.

 

I suspect your line 34 is less than your line 31, which is why line 32 isn’t being filled in when you claim over $600 for the foreign tax credit.

 

Florian

Tax Research Specialist

Valued Pioneer
Posts: 4
Registered: ‎04-05-2018

Re: Foreign Tax income > $600 - credits not working

Where is the box to check?