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This is picky, but I want my return to be lean and mean.

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?

--fleg

P.S. Taking the foreign taxes as a deduction makes no difference--I don't owe any taxes for 08 anyway (never, ever thought I'd be able to say that).
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Heck yes. Just attach a copy of your broker's statement which shows the amount of foreign taxes withheld and take the credit.
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Heck yes. Just attach a copy of your broker's statement which shows the amount of foreign taxes withheld and take the credit.

The foreign tax credit is a nonrefundable credit. The OP stated that he had no tax liability, so claiming the credit without filing the 1116 provides no immediate benefit.

On the other hand, I know that under certain circumstances you can carry forward an unused foreign tax credit if you do file the 1116. Unfortunately, it's been so many years since I had to complete an 1116 that I no longer remember what those circumstances are.

In no event do you attach the broker's statement showing the amount of foreign taxes withheld to your return.

Ira
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In no event do you attach the broker's statement showing the amount of foreign taxes withheld to your return.

You can attach any supporting documentation that you want to substantiate your deductions or credits. The almighty government forms are not the only things you include on your return. I wasn't aware of the OP's zero tax liability but if he did owe taxes he could and should attach the broker's statement if other required forms erroneously show zero when he did have foreign taxes withheld and this would be acceptable to the infernal revenue service. Don't leave common sense at the door when you fill out a tax return.

You don't know what the hell you are talking about.
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There is some misunderstanding of what I posted.

I had foreign tax withheld from dividends. This was reported on 1099s.

I filled out (or had TurboTax do it) Form 1116 to see if I got a foreign tax credit. The form says I get zero foreign tax credit. I will check the worksheet for Form 1116 to see if I can carry forward any unclaimed credit.

Since I get zero foreign tax credit, should I even bother to include Form 1116 with my return?

That was the question.

As an aside, I mentioned that I owe no tax for 08 because I anticipated that someone would suggest I take the foreign tax witheld as a deduction. Whether I take it or not, makes no difference.

--fleg
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You can attach any supporting documentation that you want to substantiate your deductions or credits. The almighty government forms are not the only things you include on your return. I wasn't aware of the OP's zero tax liability but if he did owe taxes he could and should attach the broker's statement if other required forms erroneously show zero when he did have foreign taxes withheld and this would be acceptable to the infernal revenue service. Don't leave common sense at the door when you fill out a tax return.

You don't know what the hell you are talking about.


Aside from the fact that we're grownups here and try to keep a civil tongue, alas, it is you, sir or madam, who speaks without knowledge.

While you certainly can attach anything you like that's not explosive to your tax return, it serves no purpose to attach items that aren't required. Further, one would be silly to attach original documentation for a deduction or credit since it may be the last time you ever see it, and then where would you be if you were audited?

Phil
Rule Your Retirement Home Fool
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I filled out (or had TurboTax do it) Form 1116 to see if I got a foreign tax credit. The form says I get zero foreign tax credit. I will check the worksheet for Form 1116 to see if I can carry forward any unclaimed credit.

Since I get zero foreign tax credit, should I even bother to include Form 1116 with my return?


I haven't used TT in years, but most software I have used produces only those forms required when you choose the "copy for filing" (or something like that) print option.

Phil
Rule Your Retirement Home Fool
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I wasn't aware of the OP's zero tax liability

The original post was a total of 4 sentences and you missed that point?



Regular poster to this board know who the ignorant one is

You don't know what the hell you are talking about.

Hint: It is not Ira


Hohum
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It appears to me that Josh Randall doth not know what he is talking about. Many of the posters on this Board, include ira are professional tax preparers. Now, Josh Randall, what tax preparation education/experience do you have?

Donna (also a professional tax preparer)
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Aside from the fact that we're grownups here and try to keep a civil tongue, alas, it is you, sir or madam, who speaks without knowledge.

While you certainly can attach anything you like that's not explosive to your tax return, it serves no purpose to attach items that aren't required. Further, one would be silly to attach original documentation for a deduction or credit since it may be the last time you ever see it, and then where would you be if you were audited?


The issue in my mind was whether a person who paid foreign taxes which were not reported as having been paid on forms sent to the IRS for inclusion in the tax return should just ignore taking a legitimate credit just because there was an error in reporting.

So I said to attach a copy (not mentioned in my OP but implied)of the broker's statement which clearly indicates the amount withheld for foreign taxes and go ahead and take the credit. The IRS, would accept that as proof even though it did not receive the correct information from the provider.

This is not rocket science and I repeat that it is stupid to leave your common sense at home when filling out a tax return and that whomever said that one should NEVER attach such supporting documentation on their tax return doesn't know what the hell they are talking about including you if that is what you believe. I stand by my statement because I know it to be true from experience. nuff said.

Don't rec this post. I'm not a rec whore.
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I wasn't aware of the OP's zero tax liability

The original post was a total of 4 sentences and you missed that point?


I said I wasn't aware of it. Duh. Why would I lie? I just focused on a slice of the issue.


Do you know how to compehend what I wrote? Then why would you ask such a stupid question?
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It appears to me that Josh Randall doth not know what he is talking about. Many of the posters on this Board, include ira are professional tax preparers. Now, Josh Randall, what tax preparation education/experience do you have?

Donna (also a professional tax preparer)


I'm a CPA with extensive tax experience. You folks are just plain wrong about this issue.
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I just went back to the OP and I did not see the PS underneath the author's name. I didn't scroll down any farther below what I saw on the screen. That explains why I didn't know that he had no tax liability.
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Josh, welcome to the Board. I would like to interject that perhaps you might want to be a little less abrasive in your postings. I am sure you have a lot to offer and we look forward to hearing from you.

Donna
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Thanks, I just don't take kindly to arrogant statements made in my direction. My response was more in-kind than a normal polite response.

I am also aware of the fact that some posters who come out of left field and make disrepectful remarks towards me for no obvious reason often has more to do with their disagreement with my conversative politics than anything else.

Perhaps there was some confusion and misunderstanding of what the issues were. I tried to clear that up in my statement of the issues. That was my assumption of the issue and that is why I responded as I did.

Perhaps we can all kiss and make up?
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**** (kiss, kiss, kiss, kiss)

Donna (who could care less what one's politics are on this Board, and appreciates any knowledge gleaned.)
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Further, one would be silly to attach original documentation for a deduction or credit since it may be the last time you ever see it, and then where would you be if you were audited?

It appears you didn't read to carefully either. I wrote in my OP:

Heck yes. Just attach a copy of your broker's statement which shows the amount of foreign taxes withheld and take the credit.

Hell yes I said "copy." I never said to attach the original. Geesh!
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Josh:

Being a CPA you should have learned by now that ANY documents that are attached to a regular filed tax return are ignored. They are not entered into the system and there is no notation on the entered tax return that there is additional documentation.

My only concern here is you posted without the full knowledge of the situation that was available to you. Do you do the same in filling out taxes and answering questions?

Dusty
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Being a CPA you should have learned by now that ANY documents that are attached to a regular filed tax return are ignored.

Total BS from someone who obviously has never responded to hundreds of IRS letters or met with IRS agents.

Where do these experts come from?
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Josh:

Being a CPA I would have thought that you would know that ANY document attached to a tax return that is not an official form of the IRS is ignored. It is not entered. There is no flag put on the tax return by the IRS that there is additional documentation. It is ignored.

My real concern here though is that you missed a very important piece of information in the original post. Do you do that also when you are performing your job? Do you not listen completly to your clients when you talking with them and gathering information before you answer?

Dusty
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Sorry about the double post - I received an error message and thought that it was not posted.
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Josh:

I can see that I will just have to ignore you. Once again - you post without knowing the facts.

Also, you did not answer the question:

How could you miss a basic fact when answering a question and do you do this same thing with your tax clients? Not get all the facts before you file a return?

Dusty
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Click on this post Einstein:

http://boards.fool.com/Message.asp?mid=27863879

What do YOU see? I see a post with a signature - no P.S. Why would I scroll down below the signature? No reason. It was signed and that's all that I saw. Duh for those of you who obviously have a reading comprehension problem. I already explained that but you missed that.

Now, after reading only what was written above the signature, try and comprehend what a reasonable person would have inferred from just that comment. Then go and look at my reponse. You will see that my answer was also reasonable in light of the fact that I only read the statement above his signature and did not see the PS, I don't owe and taxes.

Then read my response where I stated the issue as I saw it. You will see that my first response was dead on.

Now go and change the subject to a real tax issue instead of asking ridiculous question and making stupid comments because by doing so you only make yourself look more like someone who doesn't have clue.
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Click on this post Einstein:

http://boards.fool.com/Message.asp?mid=27863879

What do YOU see? I see a post with a signature - no P.S.


Okay, maybe you need a bigger monitor. When I click on the post, I see the PS without scrolling. I've also been around long enough to know that many posters add a PS below their signature so I expect there may be one.

And for the OP, if the credit doesn't benefit you, I don't see any reason to file the form. Just because you are eligible for a credit doesn't mean you have to take it. I often advise clients that they are eligible for a credit of $N but that the cost of tax preparation for the required form is $N+1 and let them decide whether or not to take the credit.

Rose
Licensed Tax Consultant
Soon to be an Enrolled Agent
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What do YOU see? I see a post with a signature - no P.S. Why would I scroll down below the signature? No reason.

So, your carelessness and sloppiness is ample justification for your angry arrogance.

Interesting concept.

Oh, and for your edification, there's no PS below my signature.

Eric Hines
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And for the OP, if the credit doesn't benefit you, I don't see any reason to file the form.

Obviously. If I had seen the "PS", I would have said the same thing.
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So, your carelessness and sloppiness is ample justification for your angry arrogance.

What an immature and idoitic response. Grow up.
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So, your carelessness and sloppiness is ample justification for your angry arrogance.
----------------------
What an immature and idoitic response. Grow up.


My irony meter just broke.
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I think it's obvious to anyone with half of a brain just who are the ones who lack reading comprehension.

I'm done with this topic. Carry on with your childish rants and "gotcha's." I never try and stop idiots from doing what they do.
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I think it's obvious to anyone with half of a brain just who are the ones who lack reading comprehension.

At least the half brain posters were reading the whole OP before responding.

I'm done with this topic.

I highly doubt it.
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Josh:

In my desire to learn more could you point to a publication / document from the IRS that indicates what other documents are appropriate to attach to a tax return?

Thanks,

Dusty
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About the only things other than tax forms that I know need to be mailed to the IRS are those that need to be attached to Form 8453.

I'm kind of surprised that a CPA is mailing anything to the IRS since most of the CPAs I know electonically transmit returns for their clients. (Or, they do the return and send them to our office to transmit, where we catch the errors they made.)
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"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?"


Possibly.
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 allowed either from or to a year in which such election is made.

As you can see, the rules are somewhat complicated. By attaching a Form 1116 in your case, you are saying that you have an unused foreign tax that can be carried to another year. (However, as already mentioned, it often happens that the carryover credit can't be utilized in a carryover year either.)

There is no requirement to attach a brokerage statement, 1099-DIV, etc., to the return that will be filed. Page 24 of IRS Publication 514 (bottom of right column, under Records to Keep) states "You do not have to attach these records to your Form 1040."
Of course, it doesn't hurt anything if they are attached.
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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?

Since your actual question seems to have been lost amongst all the babbling (and since I've been away from the boards for the last week), let's try to actually answer your question.

You have two options with the foreign tax credit. If the credit is under $300 ($600 for MFJ) and you meet a couple of other requirements, you can simply claim the credit without filing the 1116. However, if you do so, you cannot carry any unused credit into that year, nor can you carry any unused credit from that year forward to future years.

Given that you have no tax liability, you would get no benefit from the foreign tax credit this year. So if you claim the credit without filing the 1116, you would lose the ability to carry the credit forward and therefore lose any benefit from the credit.

I would suggest, then, that you complete and attach the 1116 to your return. That would allow you to carry the credit over into future years where you may get some benefit from the foreign taxes you paid this year.

--Peter
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Heck yes. Just attach a copy of your broker's statement which shows the amount of foreign taxes withheld and take the credit.

Hzving been off at an investor education conference since last Thursday, I seem to have missed the firestorm which resulted from my post. <vbg>

Nevertheless, I have to question the directions given above. Why attach unnecessary documentation? Foreign taxes paid are already reported to the IRS on 1099-DIV. There is no need to provide additional paper.

Ira

P.S. (yes, I realize not everyone will see this) Anyone interested in a top-notch investor education conference, check out InvestEd 2010, August 6-8, 2010 in Baltimore, MD. (www.investor-education2010.org). You can learn more about us by replacing 2010 in the URL with 2008 or 2009 - links to the websites for the previous two conferences.
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Anyone interested in a top-notch investor education conference, check out InvestEd 2010, August 6-8, 2010 in Baltimore, MD. (www.investor-education2010.org).


The software displayed at the site seems very similar to the Investor's Toolbox (or something like that) which was recently being pushed by BusinessWeek. It was basically daytrading software with a big subscription fee, hundreds for six months. That's after a seminar that cost thousands. Buyer beware.
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The software displayed at the site seems very similar to the Investor's Toolbox (or something like that) which was recently being pushed by BusinessWeek. It was basically daytrading software with a big subscription fee, hundreds for six months. That's after a seminar that cost thousands. Buyer beware.

Certainly the buyer should beware, but you obviously haven't been hanging around this board very long or you would know that I wouldn't be flogging anything that wasn't on the up and up.

The software is definitely NOT Investor's Toolbox and is not daytrading software. We (InvestEd) don't push software at the conference, we provide education. We are a 501(c)3 charitable organization. As part of our educational sessions, we do provide a the opportunity for certain software suppliers who meet our standards to demonstrate their software (and sell it if people want to buy it), but the software that we allow to be shown is compatible with long-term fundamental investing, not daytrading. Details of Investor's Toolkit (note, NOT Toolbox) produced by ICLUBCentral, a part of BetterInvesting (a 501(c)3 organization) can be found at www.iclub.com. Similar software can be found at Churr Software, www.churr.com. Portfolio management software is produced by QuantIX, www.quantix,com. And investment club accounting software by ICLUB and bivio (www.bivio.com). All of these software programs are also endorsed by BetterInvesting, another 501(c)3 charitable organization dedicated to investor education. If you need further convincing that we are above-board, you should know that FINRA is one of our sponsors. (Well, nowadays, maybe that isn't so reassuring.)

Let me suggest that anyone with any questions take a look at www.investor-education2009.org which will give you all of the details about our recently held conference in Salt Lake City.

Ira
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