Lacerte doesn't print Form 1116 correctly with a high tax kickout.

[A_tax_preparer]

I was just preparing a return for a client with $7,387 in foreign passive income, $336 of which was high-taxed, and getting Lacerte to calculate the foreign tax credit correctly was a nightmare.

Form 1116 for passive category income is supposed to show income and deductions for each foreign country in a separate column, with high-taxed income entered as a subtraction in its own column. There is no way to do this properly in Lacerte.

If you enter the high-taxed income on a separate page in screen 35.1, the program fills out the country columns correctly, but doesn't add them together right; it adds the income together but ignores the HTKO column.

To get the credit to calculate correctly, I had to change the income category for two countries to high-taxed, but this caused those two countries to be omitted from page 1 of the 1116.

Line 1a on the finished form for passive income shows two countries with income of $7,687 and $376, plus the HTKO column showing -$384. The Total column shows $8,063, which is not the sum of those three numbers. There should be five columns, including the HTKO, with the missing $384 showing on the missing two columns.

The issue seems to be that the program doesn't properly subtract the HTKO from foreign source passive income, so I have to enter it in a roundabout way.

My question is: is Intuit working to fix this?

[sjrcpa]

Probably not. For $336 of HTKO I would move on.

Lacerte has never done a good job with this form unless you just had plain vanilla dividends and interest.

[A_tax_preparer]

An update: for some reason, entering the kickout amounts on their own screen and typing "HTKO" in the foreign country data field (you have to tab out of it after typing each letter to bypass the autofill) causes the software to fill out the 1116 correctly. You have to fill out two screens this way: one for the passive income form with negative amounts, and one for the form the kickout goes to. One remaining issue is that you have to enter the foreign taxes on line 8 instead of line 13 to get the carryover to calculate correctly.  This solution makes no sense, but it works. *shrugs*