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Foreign Tax Carryforward...
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Confused
May 24, 2012, 5:32:16 PM5/24/12
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I have several thousand in foreign tax credits I haven't been able to use because I haven't had enough income. I know I can carry it forward for 10 years; who knows maybe someday I will have enough income. Not likely, but possible.
I am thinking of getting rid of all my foreign stocks and going with a ETF instead. Among other things, I will never have foreign tax credits I can't use again.
Presumably that means I can never carry the old FTCs forward because I won't have any foreign income. I would probably never get to use them anyhow, but I hate to just lose them. Any clever way to show foreign income so I can use the carry forward?
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I am thinking of getting rid of all my foreign stocks and going with a ETF instead. Among other things, I will never have foreign tax credits I can't use again.
Presumably that means I can never carry the old FTCs forward because I won't have any foreign income. I would probably never get to use them anyhow, but I hate to just lose them. Any clever way to show foreign income so I can use the carry forward?
--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2011) - All rights reserved. >>
<< ------------------------------------------------------- >>
removeps-groups
May 24, 2012, 7:07:51 PM5/24/12
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"Confused" <*@lippman.info> wrote in message
news:153591fb-bad0-400a...@googlegroups.com...
>I have several thousand in foreign tax credits I haven't been able to use
>because I haven't had enough income.
> I know I can carry it forward for 10 years; who knows maybe someday I will
> have enough income.
> Not likely, but possible.
>
> I am thinking of getting rid of all my foreign stocks and going with a ETF
> instead.
> Among other things, I will never have foreign tax credits I can't use
> again.
>
> Presumably that means I can never carry the old FTCs forward because I
> won't have any foreign income.
> I would probably never get to use them anyhow, but I hate to just lose
> them. Any clever way to show foreign income
> so I can use the carry forward?
If you buy an ETF you will still have foreign income that is reported on
1099-DIV. Look at the detail statement of 1099-DIV; it will list the date
of each dividend and country paid to, as well as date of each foreign tax
paid and date. If the foreign tax credit is less than $300 if single and
$600 if married, you can just take the foreign tax credit listed on 1099-DIV
in full. But you don't have to. You can use form 1116, print out the
foreign countries, dividends from each, foreign tax paid on 1099-DIV, then
your credit. If your dividend income is more than these thresholds then you
have to file form 1116, along with AMT form 1116. Pain. I forget whether
you can use credit for country A towards country B.
news:153591fb-bad0-400a...@googlegroups.com...
>I have several thousand in foreign tax credits I haven't been able to use
>because I haven't had enough income.
> I know I can carry it forward for 10 years; who knows maybe someday I will
> have enough income.
> Not likely, but possible.
>
> I am thinking of getting rid of all my foreign stocks and going with a ETF
> instead.
> Among other things, I will never have foreign tax credits I can't use
> again.
>
> Presumably that means I can never carry the old FTCs forward because I
> won't have any foreign income.
> I would probably never get to use them anyhow, but I hate to just lose
> them. Any clever way to show foreign income
> so I can use the carry forward?
1099-DIV. Look at the detail statement of 1099-DIV; it will list the date
of each dividend and country paid to, as well as date of each foreign tax
paid and date. If the foreign tax credit is less than $300 if single and
$600 if married, you can just take the foreign tax credit listed on 1099-DIV
in full. But you don't have to. You can use form 1116, print out the
foreign countries, dividends from each, foreign tax paid on 1099-DIV, then
your credit. If your dividend income is more than these thresholds then you
have to file form 1116, along with AMT form 1116. Pain. I forget whether
you can use credit for country A towards country B.
Tom Healy CPA
Jun 19, 2012, 6:21:54 PM6/19/12
to
Consider buying securities listed on the appropriate foreign market (ie Toronto Stock Exchange for Canadian foreign tax credits). If you are able to sell at a net gain, that will generate foreign capital gains, against which you can use the credits.
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