Foreign tax credit gets carried forward, but not the income?


Every year I have $1,000 in foreign taxes on $5,000 of foreign
income. I have little other income and large deductions, so haven't
paid any taxes the last couple years; and haven't gotten any credits.
I hope to have enough income to pay taxes in a year or two and might
use the credits then.
The way I read 1116, I can carry the for foreign taxes forward 10
years, but not the foreign income; so it would very quickly get to the
point where there was no point to carrying them forward because in any
year I might actually pay enough taxes to use the credit, I wouldn't
have enough foreign income to support them. (5 years hence, I would
have $5,000 in foreign taxes (with carry forward), but only $5,000 in
income, so I wouldn't get much) Is that correct, or am I missing
something.
I did have enough income in 2007 to carry the credits from 2008 back
and get benefit from them. The problem is that I already amended my
2007 return (my previous accountant made a bunch of serious mistakes)
before I did my 2008 return. My new account doubts it is cost
effective to do it again. Is that more to it than filing a revised
1040 an a revised 1116, and getting a $1,000 refund? That shouldn't
be expensive. His first amended return was 4" thick, but this
amendment is rather simpler. Am I underestimating the challenge? Can
you amend a 2007 return twice?
Reply to
Toller
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There is no limit on the number of amended returns you can file, as long as the statute of limitations is open.
This amendment might be simple enough to do yourself. Your starting numbers on the second 2007 1040X would be the numbers from the first 1040X, not from the original 1040. If you have enough foreign source income and tax liability to get a $1000 refund, I'd think it would be worth the effort.
Katie in San Diego
Reply to
Katie

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