Have a Tax Question? Ask a Tax Expert
Foreign tax credits are carried over to the following year - and are treated as if taxes were paid in that tax year for calculating the credit. So on your 2015 tax return you woudl calculate a foreign tax credit in similar manner as you did in 2014.
You will use foreign taxes paid in 2015 and add the amount of foreign tax credits are carried over.
If your 2015 foreign tax credit is $17,000 - that means - you may NOT use any 2014 foreign tax credit carried over and- you will have additional 2015 foreign tax credit carried over
If you cannot claim a credit for the full amount of qualified foreign income taxes you paid or accrued in the year, you are allowed a carryback and/or carryover of the unused foreign income tax. You can carry back for one year and then carry forward for 10 years the unused foreign tax.After 10 years - all credits are lost.
Foreign tax credit may be USED only to offset US taxed on foreign income.Unused amount are carried to other years.
If you will not have any foreign income in coming years - chances are that you will not be able to use that unused foreign tax credit carried over.
You can choose to take the amount of any qualified foreign taxes paid during the year as a foreign tax credit or as an itemized deduction. To choose the deduction, you must itemize deductions on schedule A.
To choose the foreign tax credit you generally must complete form 1116 and attach it to your tax return.
You must choose either the foreign tax credit or itemized deduction for all foreign taxes paid or accrued during the year. This is an annual choice.
.I appreciate if you take a moment to rate the answer.Experts are ONLY credited when answers are rated positively.If you still have any doubts, need clarification - please be sure to ask.I am here to help you will all tax related issues.