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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.

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