Accountant mistake? Foreign Tax Carryover

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Copernicus
Posts: 322
Joined: Thu May 16, 2013 4:38 pm

Accountant mistake? Foreign Tax Carryover

Post by Copernicus » Fri Mar 23, 2018 2:43 pm

I checked my 2016 and earlier returns prepared by an accountant. In all those years, he had listed carryover FTC numbers at the end of the Fed return printout he gave me, but there was no entry on line 10, Form 1116 and AMT 1116. Why he did not use CO, which I think might have given me a bigger refund? A mistake in his software?

This year, I am planning to use carryover number from 2016 on line 10 since it gives me a larger refund. (Used Simplified method for FTC). Can I carryover this year, when the accountant did not until last year? That is the question.

Thanks and regards!

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CaliJim
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Location: California, near the beach

Re: Accountant mistake? Foreign Tax Carryover

Post by CaliJim » Fri Mar 23, 2018 3:47 pm

Copernicus wrote:
Fri Mar 23, 2018 2:43 pm
I checked my 2016 and earlier returns prepared by an accountant. In all those years, he had listed carryover FTC numbers at the end of the Fed return printout he gave me, but there was no entry on line 10, Form 1116 and AMT 1116. Why he did not use CO, which I think might have given me a bigger refund? A mistake in his software?
It could be that it wasn't entered on line 10 because it would not have made a difference in taxes owed. There is a limit to the FTC. In other words, why enter in the carryover if it can't be used....

Pub 514:
"Your foreign tax credit cannot be more than your total U.S. tax liability (Form 1040, lines 44 and 46) multiplied by a fraction. The numerator of the fraction is your taxable income from sources outside the United States. The denominator is your total taxable income from U.S. and foreign sources."

But you could always call your accountant and ask him why he entered the data the way he did. You paid him for the work... and IMHO..you are entitled to ask him questions about the work he did.
Copernicus wrote:
Fri Mar 23, 2018 2:43 pm
This year, I am planning to use carryover number from 2016 on line 10 since it gives me a larger refund. (Used Simplified method for FTC). Can I carryover this year, when the accountant did not until last year? That is the question.
I dunno. But I found this answer on Intuit support site: https://accountants-community.intuit.co ... ns/1340839
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Copernicus
Posts: 322
Joined: Thu May 16, 2013 4:38 pm

Re: Accountant mistake? Foreign Tax Carryover

Post by Copernicus » Fri Mar 23, 2018 5:31 pm

CaliJim wrote:
Fri Mar 23, 2018 3:47 pm
Copernicus wrote:
Fri Mar 23, 2018 2:43 pm
I checked my 2016 and earlier returns prepared by an accountant. In all those years, he had listed carryover FTC numbers at the end of the Fed return printout he gave me, but there was no entry on line 10, Form 1116 and AMT 1116. Why he did not use CO, which I think might have given me a bigger refund? A mistake in his software?
It could be that it wasn't entered on line 10 because it would not have made a difference in taxes owed. There is a limit to the FTC. In other words, why enter in the carryover if it can't be used....

Pub 514:
"Your foreign tax credit cannot be more than your total U.S. tax liability (Form 1040, lines 44 and 46) multiplied by a fraction. The numerator of the fraction is your taxable income from sources outside the United States. The denominator is your total taxable income from U.S. and foreign sources."

But you could always call your accountant and ask him why he entered the data the way he did. You paid him for the work... and IMHO..you are entitled to ask him questions about the work he did.
Copernicus wrote:
Fri Mar 23, 2018 2:43 pm
This year, I am planning to use carryover number from 2016 on line 10 since it gives me a larger refund. (Used Simplified method for FTC). Can I carryover this year, when the accountant did not until last year? That is the question.
I dunno. But I found this answer on Intuit support site: https://accountants-community.intuit.co ... ns/1340839
Thanks, CaliJim. In TurboTax, I elected simplified method as the accountant said he had done previously. TT interview asks whether I have prior year's FTC carryover. I entered the numbers for 2016 and TT recalculated my refund higher by about $50. TT did not prevent me from using the CO. So, it seems that the answer in the link (2 yrs old) you provided may not apply any more as it says 'if you use simplified method, you don't get the carryover'.
I entered 2015 numbers also. The refund amount remains the same.

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