Tax

Have a Tax Question? Ask a Tax Expert

Ask an Expert,
Get an Answer ASAP!

Tax
This answer was rated:

Can you use a foreign tax carryforward deduction in a year you do not have foreign income?

Can you use a foreign...
Can you use a foreign tax carryforward deduction (not credit) in a year you do not have foreign income? US citizen , worked abroad, paid foreign taxes on earned income, have large carryforward but will not have any more foreign earned income. Thanks. XXXXX understand it the credit is not available in the above circumstance.
Show More
Show Less
Ask Your Own Tax Question
Answered in 39 minutes by:
5/1/2013
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 30,133
Experience: Taxes, Immigration, Labor Relations
Verified

LEV :

Hi and welcome to Just Answer!


You can choose whether to take the amount of any qualified foreign taxes paid or accrued during the year as a foreign tax credit or as an itemized deduction. You can change your choice for each year's taxes. However - you may not claim both during the same year.


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 carryback for one year or carryover for 10 years the unused foreign tax.


If you choose to take a credit for qualified foreign taxes, you must take the credit for all of them. You cannot deduct any of them. Conversely, if you choose to deduct qualified foreign taxes, you must deduct all of them. You cannot take a credit for any of them.
If you choose to claim a credit and have a carryover amount - that amount may not be converted to deduction.


If you claim an itemized deduction in a year for qualified foreign taxes, you can choose instead to claim a foreign tax credit for that year by filing an amended return on Form 1040X within 10 years, if claiming the foreign tax credits results in a refund of income tax to you.

Customer:

the question remains can you deduct [say in this example tax year 2013] as an itemized deduction the foreign tax expense that has been carried forward even though you have no foreign earned income for tax year 2013. I have a foreign tax credit carryforward of 50,000 on 2012 return but stopped working overseas in 2012 and will have no foreign sourced income in 2013. I've read the publ 514 from IRS and it is just not clear.

LEV :

If foreign taxes were paid in 2012 - you may not deduct these taxes on your 2013 tax return.
What you may do - you may choose to use a foreign tax deduction instead of foreign tax credit on your 2012 tax return.

Customer:

thank you that is the crux of the question - can I DEDUCT [itemized on sched A] my 2012 carryover to 2013 even though no foreign earned income on 2013. I know I can't take a credit on 1116 unless I have foreign income in that same year. Sorry I am having trouble phrasing the question.

LEV :

You may NOT deduct on your 2013 tax return - foreign taxes that were paid in 2012.
You may not convert carryover foreign tax credit into deduction.
You may only amend your previous tax return and claim deduction instead of credit - that is your only option.

Customer:

so if unusable as carryforward would make all kinds of sense to amend 2012 and maybe even 2011? or they are forfeited? small part of them available from the 2010 carydforward and some also from 2011 carryforward.

LEV :

If you choose to claim a foreign tax credit - any unused carryover amounts may be ONLY used as a credit - you may not convert them into deduction in later years.
However - you may choose either to claim a deduction or a credit in the year foreign taxes were paid (or incurred if you selected so).
If it would be more beneficial for you to claim a credit or deduction - that should be verified by preparing tax return both ways and compare.
You may go back and amend your past tax return up to 10 years in this case.

Customer:

I see - 2012 it was more beneficial to claim credit looked at in isolation--- but now knowing the carryforward is unusable going forward it possibly would be more beneficial to amend 2012 [or at least analyze it] ... thanks.

LEV :

Yes - if you have large amount of foreign taxes paid in 2012 - you may choose deduction instead of the credit.
Also - depending on your state - that deduction might be used on your state income tax return - that is something you need to consider when compare these options.

Customer:

thanks. you've been very helpful

LEV :

I am glad to be helpful.

Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 30,133
Experience: Taxes, Immigration, Labor Relations
Verified
Lev and 87 other Tax Specialists are ready to help you
Ask your own question now
Ask Lev Your Own Question
Lev
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 30,133
30,133 Satisfied Customers
Experience: Taxes, Immigration, Labor Relations

Lev is online now

A new question is answered every 9 seconds

How JustAnswer works:

  • Ask an ExpertExperts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional AnswerVia email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction GuaranteeRate the answer you receive.

JustAnswer in the News:

Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.

What Customers are Saying:

I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response...

T.G.WMatteson, IL

I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight.

BonnieChesnee, SC

Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation.

JohnMinneapolis, MN

Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with.

OrvilleHesperia, California

Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help.

Mary C.Freshfield, Liverpool, UK

This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!!

AlexLos Angeles, CA

Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult.

GPHesperia, CA

< Previous | Next >

Meet the Experts:

Wallstreet Esq.

Wallstreet Esq.

Tax Attorney

586 satisfied customers

10 years experience

Mark D

Mark D

Enrolled Agent

1,300 satisfied customers

MBA, EA, Specializing in Business and Individual Tax Returns and Issues

Richard

Richard

Tax Attorney

4,310 satisfied customers

29 years of experience as a tax, real estate, and business attorney.

Robin D.

Robin D.

Senior Tax Advisor 4

13,695 satisfied customers

15years with H & R Block. Divisional leader, Instructor

Megan C

Megan C

Certified Public Accountant (CPA)

8,651 satisfied customers

Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level

jgordosea

jgordosea

Enrolled Agent

2,885 satisfied customers

I've prepared all types of taxes since 1987.

R. Klein, EA

R. Klein, EA

Enrolled Agent

1,839 satisfied customers

Over 20 Years experience

< Previous | Next >

Related Tax Questions
Impact of tax changes on filing amended returns... Client
Impact of tax changes on filing amended returns... Client filed a 2016 tax return on time in 2017. If the tax laws change significantly, which laws apply when amended returns are filed... the tax laws… read more
Barbara
Barbara
Enrolled Agent, Paralegal
3,463 satisfied customers
Dose mean can not deduct state income taxes only or dose it
dose mean can not deduct state income taxes only or dose it includes property taxes too … read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
Filed W1040 for self-employment. Should I file amended return for HSH?
I was self-employed last year and I filed a W1040 tax form. Everything went through well. I did it through an H&R computer program. Currently I am in need of financial aid as I am going to college. I … read more
Robin D.
Robin D.
Senior Tax Advisor 4
Vocational, Technical or Trade School
13,695 satisfied customers
Is real estate income taxed only in the state they are
Hi. Is real estate income taxed only in the state they are generated in? For example, if someone owned investment real estate in Texas that has a 0% state income tax and lives in Pennsylvania, would t… read more
Robin D.
Robin D.
Senior Tax Advisor 4
Vocational, Technical or Trade School
13,695 satisfied customers
I filed for an extension to file my 2017 income tax return.
I filed for an extension to file my 2017 income tax return. I recently suffered a stroke - 6 weeks ago - and have been unable to finalize my return. I should be able to file it within the next 30 days… read more
Barbara
Barbara
Enrolled Agent, Paralegal
3,463 satisfied customers
RE: FOREIGN TAX CREDIT We're filing a married joint filing
RE: FOREIGN TAX CREDIT We're filing a married joint filing tax return and have come up against some problems on form 1116. 1) Do we add both our names on the form? 2) On line 3a, it asks for certain i… read more
Barbara
Barbara
Enrolled Agent, Paralegal
3,463 satisfied customers
I have a foreign tax credit carryover from 2016 to 2017 and
I have a foreign tax credit carryover from 2016 to 2017 and am wondering if i can take it even though I have no foreign sourced income in 2017 … read more
Barbara
Barbara
Enrolled Agent, Paralegal
3,463 satisfied customers
Can a taxpayer file an amended return to elect into the
Can a taxpayer file an amended return to elect into the installment method if the original return was filed error without the installment method.… read more
PDtax
PDtax
Owner
Master\u0027s Degree
1 satisfied customers
Us citizen living and working in colombia SA earned income
us citizen living and working in colombia SA earned income and unearned how do i report the interest and dividends are these tax at he same rate or can you also exclude them like the earned income … read more
Chad CFP ®
Chad CFP ®
Certified Financial Planner(R), Pro
Master\u0027s Degree
723 satisfied customers
I would like help with claiming a foreign tax credit from
Hi, I would like help with claiming a foreign tax credit from Canadian form NR4 … read more
Chad CFP ®
Chad CFP ®
Certified Financial Planner(R), Pro
Master\u0027s Degree
723 satisfied customers
Can franking credit on an Australian income tax return be
Can franking credit on an Australian income tax return be used on Form 1116 as tax paid on the franked distributions? … read more
Robin D.
Robin D.
Senior Tax Advisor 4
Vocational, Technical or Trade School
13,695 satisfied customers
I have a foreign tax credit question... I have cancellation
I have a foreign tax credit question... I have cancellation of debt income of $50k from a foreign lender (England) on a K-1.(Taxpayer is a G.P.) Can I characterize that relief of debt as passive incom… read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
Foreign earned income tax exemptions. My husband started
foreign earned income tax exemptions. My husband started working in the UAE in February 4, 2017. How many days is he allowed to physically visit the USA in a 12 month period to be qualified for the ex… read more
Robin D.
Robin D.
Senior Tax Advisor 4
Vocational, Technical or Trade School
13,695 satisfied customers
When will 2015 amended returns be processed, I filed an
I filed an amended return 1 year ago. IRS has not yet begun processing. How long does it take? … read more
Mark Taylor
Mark Taylor
Certified Public Accountant
Masters
2,217 satisfied customers
I am looking at the form 1116 (foreign tax credit). I have
I am looking at the form 1116 (foreign tax credit). I have paid $30,000 in taxes in the UK (I live all year here), the US tax says line 22 on the form can only be 21,000. Where do I report the carry o… read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
I have a new client with quite a large foreign tax credit
I have a new client with quite a large foreign tax credit carryforward, strictly from wages while working in Canada in 2015. He did not work in Canada in 2016. It is not taking this credit at all agai… read more
keeperumiami
keeperumiami
Sr Financial & Tax Consultant
Bachelor\u0027s Degree
1 satisfied customers
I am carrying forward a foreign tax credit but i do not know
Hello i am carrying forward a foreign tax credit but i do not know how to claim it i paid for premium software, yet there is no entry for it … read more
Dr Arthur Rubin
Dr Arthur Rubin
Doctoral Degree
24 satisfied customers
I have to use form 1116 for a foreign tax credit line 14
I have to use form 1116 for a foreign tax credit line 14 code B the amount is 108, I got to putting in the country which is various, where do I put the 108 … read more
Anne
Anne
Master Tax Preparer
1,328 satisfied customers
Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Show MoreShow Less

Ask Your Question

x