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Author: irasmilo Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 125003  
Subject: Re: Foreign Tax Credit & form 1116 Date: 2/9/2009 1:10 PM
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I haven't received all our brokerage forms yet but it looks like we will exceed the $600 maximum, for married filing jointly, foreign tax credit. All the foreign taxes were paid by mutual funds and ETFs we own.

I have briefly looked at form 1116 and I really don't want to have to figure it out. Is it allowed to simply take the $600 maximum and forfeit any additional foreign tax credit? It simply wouldn't be worth all the work and frustration for less than $50 dollars in tax credit.

No. You can't do what you propose. The foreign tax amount is subject to document matching by IRS computers, so you will get a letter requiring you to explain the discrepancy. Your only alternative to filling out Form 1116 is to claim the foreign taxes as an itemized deduction on Schedule A. No need to do any complex calculations, but the benefit is usually smaller than if you calculated the allowable tax credit.

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