Common questions about Form 1116, Foreign Tax Credit in Lacerte

Get answers to frequently asked questions about entering an individual Form 1116, Foreign Tax Credit, in Intuit Lacerte.

• Generating Form 1116 Foreign Tax Credit for an Individual return
• Electing not to file Form 1116 with an Individual return in Lacerte
• Calculation of the Qualified Dividend Adjustment on Form 1116 Line 1a in Lacerte
• How to enter foreign taxes withheld from foreign income to report on Form 1116 in Lacerte

How is the pro rata share of home mortgage interest calculated?

Although Lacerte doesn't print copies of the worksheet, the program uses the Worksheet for Home Mortgage Interest - Line 4a found in the Form 1116 instructions to calculate the amount on this line.

If you disagree with the calculated value:

1. Go to Screen 35, Foreign Tax Credit (1116).
2. Scroll down to the Deductions and Losses section.
3. Enter the appropriate amount in Home mortgage interest [O].

What if line 17 is zero or less?

When line 17 is zero or negative, your client's net foreign source taxable income for this category is too low to warrant a credit. If this appears incorrect, verify the amounts on lines 15 and 16.

Form 1116 Generating Blank Page but Credit Still Flows to 1040

Form 1116 may not be required if certain conditions are met. See Election To Claim the Foreign Tax Credit Without Filing Form 1116 in the government instructions for details.

This will also occur when the "Category of income" is not selected in any of the following screens:

• Screen 11, Interest Income in the section titled Foreign Account and Foreign Tax Credit
• Screen 12, Dividend Income in the section titled Foreign Tax Credit
• Screen 16, Business Income in the section titled Foreign Income Information
• Screen 19, Farm Income in the section titled Foreign Income Information
• Screen 20, Pass-through K-1's in the section titled Foreign Transactions
• Screen 35, Foreign Tax Credit

Note: Form 1116, will not generate if the Foreign Tax Credit has been overridden on form 1040.

To see if an override has been entered:

1. Go to Screen 38.2, EIC, Residential Energy, Other Credits. (Screen 39 in 2013 and prior years).
2. Scroll down to the Other Credits section.
3. Check the field Foreign tax credit (1116) [O] for an entry.