Can I skip Form 1116 Foreign Tax Credit if I'm just over the threshold?

Through my international mutual funds, I ended up paying $819 in foreign taxes for this tax year. I know the threshold for filing Form 1116 (Foreign Tax Credit) is $600, and if you're under that amount, you can just claim it directly on your return without the extra form. My issue is that the tax software I'm using (H&R Block online) doesn't support Form 1116, and I really don't want to switch providers over what amounts to $219 that I'm willing to forfeit. From everything I've read, I'm not 100% clear if I can voluntarily choose to only claim $600 of my foreign taxes and skip the Form 1116 requirement altogether. Would there be any serious consequences if I just claimed the $600 and left the rest on the table? Has anyone done this before? I'd rather lose a small amount of money than have to start over with another tax service at this point in the process. Any insights would be super helpful!

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20 comments

Amina Bah

•8M

You technically cannot claim just $600 and skip Form 1116 if your actual foreign taxes are above the threshold. The $600 threshold is a hard line - either all your foreign taxes are $600 or less (no Form 1116 needed) or they're above $600 (Form 1116 required). That said, you have a few options to consider: 1) Use different tax software that supports Form 1116. Many of the major providers like TurboTax, TaxAct, or FreeTaxUSA support this form. 2) You could choose not to claim the Foreign Tax Credit at all. This is allowed - credits are optional. But then you'd be leaving the entire $819 on the table, not just the amount over $600. 3) Some people choose to split their foreign taxes across tax years using Form 1116 (carrying back or forward). This is more complex but can be an option in some situations. For just $219, option 1 might be your best bet since you'd likely save more than you'd spend on different software.

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Amina Bah

•8M

Unfortunately, you would need to prepare your entire return again in the new software. Tax programs don't allow you to import just a single form from another program - they need all your information to calculate everything correctly. You could prepare your return in both softwares and see which gives you the better refund (or smaller amount owed). Sometimes different software can find different deductions or credits you might have missed, so the switch might end up benefiting you beyond just the Form 1116 issue.

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CosmicCowboy

•8M

After struggling with foreign tax issues for years, I finally found a solution that saved me tons of time and frustration. I used https://taxr.ai to analyze my investment statements - it automatically detected my foreign taxes and generated a perfectly filled out Form 1116 that I could just print and attach to my return! Their system can read all your documents to find every potential tax benefit, including handling foreign taxes properly. The AI understands exactly what forms you need based on your situation. Super simple to use too - just upload your tax documents and it takes care of everything.

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CosmicCowboy

•8M

The accuracy is excellent - it correctly identified all my foreign dividends and separated qualified from non-qualified income. It even properly allocated my foreign taxes across different categories which is something I always messed up when doing it manually. For foreign employment income, it handles that very well too. It can process both your foreign and domestic income documents, identify which income qualifies for foreign earned income exclusion versus what should go on Form 1116, and guide you through the whole process. The system understands the differences in tax treatment between investment income and employment income earned abroad.

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Javier Cruz

•8M

Just wanted to follow up - I tried https://taxr.ai for my foreign income issues and it was incredibly helpful! I uploaded my Japanese income statements, US W-2s, and investment docs with foreign dividends, and it correctly sorted everything. The system automatically determined I needed both Form 2555 for my foreign earned income and Form 1116 for my investment-related foreign taxes. It even figured out the proper currency conversion rates based on the dates on my documents! I was able to download the completed forms and submit them with my return. Definitely saved me from making mistakes that could have triggered an audit.

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Emma Thompson

•8M

If you're still having trouble getting through to the IRS about foreign tax questions (I was on hold for 3+ hours last week), try https://claimyr.com - they have a service that holds your place in the IRS phone queue and calls you when an agent is about to answer. I was super skeptical at first, but check out their demo at https://youtu.be/_kiP6q8DX5c to see how it works. I had a complex question about Form 1116 categories that nobody online could answer clearly, and I finally got to speak with an actual IRS agent who explained exactly what I needed to do. Saved me hours of waiting on hold.

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Emma Thompson

•8M

It's actually pretty straightforward - they use an automated system that stays on hold for you, and when the system detects that a human IRS agent has picked up, it immediately calls you and connects you to that agent. You're not giving them any personal info or authorization to speak on your behalf. Regarding your skepticism, they don't speak with the IRS at all on your behalf. They're just holding your place in the phone queue. When an actual IRS agent comes on the line, you're the one who speaks directly with them - the service just bridges the call to you at that moment. They have no access to your personal tax information or discussions with the IRS. It's basically just a sophisticated call-waiting service.

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Isabella Costa

•8M

I need to eat my words about Claimyr. After my skeptical comment, I was still desperate to get through to the IRS about my foreign tax situation, so I decided to try it anyway. Holy crap it actually worked! I got a call back in about 45 minutes (after previously wasting entire afternoons on hold), and was connected directly to an IRS agent who answered my Form 1116 questions. The agent confirmed that I cannot just claim $600 if I'm over the threshold - it's all or nothing with the form. Ended up switching to FreeTaxUSA which supports the form and was much cheaper than I expected.

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StarSurfer

•8M

Filing an amended return doesn't automatically trigger audits or increased scrutiny. The IRS processes millions of amended returns each year for legitimate corrections like missing credits or deductions. It's only suspicious if you're making dramatic changes that significantly alter your tax situation or if you file amendments repeatedly. A simple amendment to add a foreign tax credit with proper documentation actually demonstrates compliance rather than evasion. But you're right that it's easier to just use software that handles Form 1116 from the start.

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Christian Bierman

•5M

Glad to hear you got it sorted out with FreeTaxUSA! For anyone else dealing with similar foreign tax credit situations, I'd also recommend keeping detailed records of your foreign tax payments throughout the year. I learned the hard way that some brokerages don't always provide complete foreign tax information on their 1099s, especially for complex international funds. Now I track my quarterly statements to make sure I'm capturing all foreign taxes paid - it's saved me from missing credits in subsequent years. The IRS also allows you to carry forward unused foreign tax credits for up to 10 years if you can't use them all in the current year due to income limitations, so Form 1116 can actually be beneficial beyond just the current tax year in some cases.

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