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medical expense and foreign tax credit

Level 1

Picked up new client who has a wife in nursing home and thus has large medical expense. Client also has foreign dividends with foreign tax withheld on Form 1099-DIV.  On his 2020 and 2021 Form s 1116 the prior CPA did not include the medical expenses as an allocation item on line 3a of the form. The insructions to line 3a on the form clearly states that medical expenses are treated as an allocable expense  not related to foreign or US income. Am I missing some thing or did he do it wrong?

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1 Comment 1
Level 15

You are correct.

FWIW, I rarely see an 1116 prepared by someone else that is correct. A lot of times the software doesn't help either since it requires manual input of a lot of things.

I highly encourage electing out of completing the form whenever possible.


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