Skip to main content

Legal

Tax & Accounting

Trade & Supply

Risk & Fraud

News & Media

Books

Developers

Interest and dividends

Exemption from foreign tax credit limitation (suppress Form 1116)

A taxpayer may be able to claim the foreign tax credit without filing Form 1116 if the following apply:
  • All foreign gross income is passive.
  • A qualified payee statement reports the income and foreign taxes.
  • The total creditable foreign taxes are not more than $300 ($600 for married filing jointly).
If the taxpayer qualifies for this exemption, enter
X
 in the
Elect Exemption from Foreign Tax Credit Limitation
 field in the
B&D
 screen in the
Income
 folder. When you make this election and the
1116
 screen contains only qualified passive income with creditable foreign taxes of no more than $300 ($600 if married filing jointly), Form 1116 won’t calculate including carryovers from or to the current tax year. Creditable foreign taxes will print directly on the Foreign tax credit line on Schedule 3 (Form 1040).
The application has 2 conditions under which it will ignore this election and proceed to print Form 1116. The 1st condition occurs when more than 1 category of income is present. The 2nd condition is when the total creditable foreign taxes surpass the eligibility threshold. This threshold is $300, or $600 if married and filing jointly.
If you force an amount in the
Amount exempt from foreign tax credit limitation (Force)
 field on the
B&D
 screen, it will report on Schedule 3 (Form 1040) without review of exemption requirements.

error-icon

Triva isn't available right now.

Check out the support page for our phone number and hours

error-close