The Motley Fool Discussion Boards
Financial Planning / Tax Strategies
|Subject: Re: Should I file this?||Date: 8/7/2009 5:43 PM|
|Author: edh3||Number: 106709 of 123001|
"This year I don't get a foreign tax credit even though I had foreign taxes withheld. Form 1116 shows zero credit. Should I include it with my return anyway?"
If not all the foreign taxes that you paid (or accrued) were able to be claimed because of the limits imposed by Form 1116, you are allowed a one year carryback of the unused foreign tax, followed by a 10 year carryforward period during which it might be possible to claim the credit. (The carryback period used to be two years.)
It's possible that the carryback/carryforward period will do no good because the credit might still be limited by the calculations on Form 1116. (Note: If you have no foreign income within a year, then Form 1116 will reduce the foreign tax credit allowed to zero for that year.)
A couple of other factors: You cannot carry an unused foreign tax to a year in which you elected to deduct the foreign tax for that year as an itemized deduction.
If the foreign taxes for the year are $300 ($600 if MFJ) or less and due to passive (e.g., interest or dividends) category income items, you can elect to claim the foreign taxes paid without using Form 1116. No carryover of unused foreign taxes is all