How to resolve ProConnect Tax diagnostic ref. 7292 Foreign currency statement is required"

Down below we'll go over how to resolve diagnostic ref. 7292 in ProConnect Tax. This diagnostic can present itself in the 1040 (Individual) tax module, showing up as:

• "Form 1116, Part II: A foreign currency conversion statement is required for foreign taxes reported as paid in foreign currency. Please note: If Form 1116 was triggered due to entries for interest, dividends (via screens 11, 12),etc., and not via the Foreign Tax Credit area (screen 35), entering the conversion statement (in screen 35) will now trigger an additional 1116 column unless the foreign source that relates to the conversion statement is tied to the new Form 1116. This can be done in the interest, dividends etc., screen that has the foreign taxes by choosing the correct Form 1116 in the "Form 1116 name or number [O]" field located in the foreign section. The tying of the foreign source to Form 1116 in this case is required and may cause an efile reject if not completed as the statement will not be rendered in the efile."

To resolve:

If income tax withheld was reported to the taxpayer in foreign currency, the IRS wants to know how that conversion was done:

1. Go to Input Return ⮕ Credits ⮕ Foreign Tax Credit.
2. Under Foreign Taxes Paid or Accrued, enter explanation in Foreign currency conversion (Ctrl+E).

If all income tax withheld was reported to the taxpayer in US Dollars make sure following are blank:

1. Go to Input Return ⮕ Income ⮕ Interest Income.
2. Under Foreign Account and Foreign Tax Credit, ensure Foreign income tax withheld (foreign currency) is blank.

1. Go to Input Return ⮕ Income ⮕ Dividend Income.
2. Under Foreign Tax Credit, ensure Foreign income tax withheld (foreign currency) is blank.

1. Go to Input Return ⮕ Income ⮕ Passthrough K-1's (Partnership).
2. Under Line 16 - Foreign Transactions, ensure Foreign Tax Withheld (Foreign Currency) is blank.

1. Go to Input Return ⮕ Income ⮕ Passthrough K-1's (S-Corporation).
2. Under Line 14 - Foreign Transactions, ensure Foreign Tax Withheld (Foreign Currency) is blank.

1. Go to Input Return ⮕ Income ⮕ Passthrough K-1's (Estate or Trust).
2. Under Foreign Transactions (between lines 11 and 12), ensure Foreign Tax Withheld (Foreign Currency) is blank.

1. Go to Input Return ⮕ Credits ⮕ Foreign Tax Credit.
2. Under Foreign Taxes Paid or Accrued, ensure the Foreign Currency subsection is blank.