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Arthur Rubin
Arthur Rubin, Tax Preparer
Category: Tax
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Experience:  22 years of tax preparation experience, including individual, trust, and estate returns.
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I am filing a late 2011 return. I want to utilize a foreign

Resolved Question:

I am filing a late 2011 return. I want to utilize a foreign tax credit carryover to offset my U.S. 2011 tax. In 2011 I did not pay any foreign tax. My carryovers come from previous years when I paid foreign tax.

My question is: in order to utilize the foreign tax credit carryover from a previous year is it necessary to file Form 1116 in 2011 even if no foreign tax was paid in 2011?

If I don't have to file Form 1116, how do I show the source of my foreign tax credit that I'd like to utilize? Should I attach the carryover worksheet from the 2010 Form 1116 to my 2011 return?

Thank you.
Karen
Submitted: 11 months ago.
Category: Tax
Expert:  Arthur Rubin replied 11 months ago.

Arthur Rubin :

Testing, 1, 2, 3

Arthur Rubin :

OK, now I have a good connection.

Arthur Rubin :

You can only utilize the carryover in 2011 if you have foreign income in 2011. In that case, you fill out part I of the form, skip part II, put the carryover amount on line 10 of part III, and attach a statement supporting that line. If you have no prior carryovers, you report the something like:

2010 form 1116 carryover: $ XXX
less carryback to 2009: $ XX
--------------------------------------------
carryover available in 2011 $ YYY

Arthur Rubin :

Sorry, let me rephrase that, as I misread your question

Arthur Rubin :

You add an attachment looking something like table 6 on page 27 of the 2011 publication 514 instructions at http://www.irs.gov/pub/irs-prior/p514--2011.pdf .

Arthur Rubin :

If you have no foreign income in 2011, then you can continue carryforwards from 2002 and later to 2012.

Arthur Rubin :

I'm going to be offline for a few hours; if you need more assistance, and are willing to wait, please don't hesitate to ask. If that's not acceptable, you can opt me out.

Arthur Rubin :

If you are willing, I might be able to provide more specific answers if you can provide the numbers from lines 9 (current foreign tax paid), 10 (foreign tax carryover), 21 (maximum amount of credit), and 22 (actual amount of credit) for each year where you have filed form 1116.

Customer:

I just want to clarify one point. If I don't pay any foreign tax in 2011, (thus there would be no entry on line 9) I can still use a foreign tax credit carryover as long as I have foreign income?

Arthur Rubin :

Yes, that's correct. The foreign income has to be subject to tax, (i.e., not treated as US income by treaty), but there doesn't have to be any actual tax.

Customer:

Thank you.

Arthur Rubin, Tax Preparer
Category: Tax
Satisfied Customers: 1233
Experience: 22 years of tax preparation experience, including individual, trust, and estate returns.
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