What do we put for "Carryover Explanation:" on FTC, Form 1116?

Melba#SAU
Melba#SAU Member Posts: 6 Newcomer
in Filing my taxes

Hi. What are we supposed to put in the blank box that follows "Carryover Explanation" on FTC, Form 1116? (There do not appear to be any columns or explanations.)

"Enter any Form 1116 foreign tax carryover information from 2024 or earlier.

"Foreign Tax Carryover: [I will enter $1,007 as "Carryover to 2025" from my last year's Carryover Report from a CPA]

"Carryover Explanation:" What to put here? Do you want each year and amount? Or what?

(Does this correspond to a known Worksheet or Schedule?)

Thank you!

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Answers

  • GeorgeM
    GeorgeM FreeTaxUSA Agent Posts: 86 image
    Hello Melba#SAU:

    Regarding your foreign tax credit carryover explanation, you might consider including in your explanation the relevant tax year that produced the carryover credit. For example, it appears from your post you are carrying over a foreign tax credit from 2024, and therefore, you might begin your explanation with that year, 2024.

    You could also reference the relevant tax form and schedule where you, or your tax preparer, previously reported the foreign tax credit carryover such as, Form 1116, Schedule B, and the specific page and line where the carryover credit has been reported. Whatever explanation you choose, because the explanation will appear in the attached Statement to Form 1116, your explanation should be something that will help you readily identify the nature of the foreign tax credit should you, or anyone else, need to review such document in the future.

    Because it appears you intend to report a foreign tax credit carryover, you will need to attach Form 1116, Schedule B to your return. If you need to do this, you'll need to print and mail your return. FreeTaxUSA doesn't currently support e-filing Form 1116, Schedule B.

    Finally, a foreign tax credit carryover cannot be claimed unless you also paid foreign taxes in the same year.

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