Question

Foreign income reporting and tax credit in step by step turbo tax desktop

Forum|Forum|1 year ago
March 9, 2025
1 reply
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Why turbo Tax does not have foreign Tax reporting and Tax credit in Step by Step mode? I can access only through form mode form 1116. We need to fix it. I am using TT Premium. Thanks.

P

pk12_2

@Rav Rast , what type of foreign source income ? Which country ? Are you a US person ( citizen/GreenCard/ Resident for Tax Purposes )? If the foreign Taxes paid is for dividend/interest income and reported on 1099s , you may be able to get a better outcome by using safe harbor ( simplified method and not form 1116 ).

Obviously I am answering in generalities because I need the questions ( I asked ) answered to be specific.

Note that while the downloaded version all have all the forms available, the step-by-step interviews cover only progressively more as one goes up the scale i.e. Home & Business covers up to the most complex situations.

While I am most familiar with the screens for H& B, I cannot comment on the Premier functionality. Therefore , please tell me what you are trying to do and /or not being able to do. Why did you have to go to forms mode ?

I will circle back , when I hear form you --yes?

R

Rav RastAuthor

I am US citizen and I only have <$500 interest from India. I already paid taxes in India on it.

P

pk12_2

@Rav Rast if the interest has been reported on a 1099- INT, or a broker's consolidated report etc. then you can easily take advantage of safe harbor treatment. You report the foreign source income as usual and the foreign taxes paid at the same time. Then when you go to Deductions and Credits tab, select foreign tax credit. TurboTax will ask you if you want deduction ( that will work only if you are using itemized deduction ) or credit. Choose credit and everything should work out.

If you reporting foreign interest income and foreign tax thereon from a financial entity / bank in India directly ( i.e. no 1099-INT ), then you pretty much follow the same path for reporting the interest income ( there is no EIN for the financial entity/ bank ) and then report the foreign tax essentially the same way. This should result in TurboTax allowing you to use the safe harbor amount applicable to your filing status. At worst and depending on the amount of foreign tax, you may have to fill out a form 1116, which generally limits the allowable credit to lesser of actual amount paid to India and US tax on the same doubly taxed foreign income.

Hope this helps.

Is there more I can do for you ?