Comparing TurboTax results against CPA for foreign tax credit calculations - worth the DIY attempt?

After managing some inherited investments for the past few years, I'm getting curious about whether I really need to keep paying big bucks to my accountant. I've been with her for around 8 years, but I used TurboTax before things got complicated. I'm running an experiment this year - doing my taxes with TurboTax myself AND having my accountant do them professionally. Then I'll compare results to see if I can handle it myself going forward or if her expertise is actually worth the money. I've hit a roadblock at the foreign tax credit section in TurboTax. All my foreign tax credits come from investments (no foreign income from work). Both my accountant and TurboTax use Form 1116, and she also uses Schedule B. What's confusing me is the "amount used" section in TurboTax. My accountant provides an attached statement showing foreign taxes paid, foreign taxes disallowed, foreign taxes claimed, and foreign tax credit carryover going back 8 years. I think TurboTax's "amount used" is equivalent to "foreign taxes claimed" but I'm not certain. When I try to understand the paper forms, my brain gets fuzzy. Is the decision about amount paid vs. amount claimed something subjective the accountant decides each year? Or does it come from calculations on Form 1116? Maybe once foreign taxes exceed a certain threshold? I could try working through Form 1116 manually to understand it better, but maybe this is exactly why people hire CPAs. Feeling a bit lost here!

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18 comments

Javier Morales

•8M

The foreign tax credit calculation is definitely one of those areas where tax software and professional preparers often diverge, so your experiment is really interesting! To answer your main question: No, the amount used vs. claimed isn't subjective. Form 1116 has specific calculations that determine this. The limitation on your foreign tax credit is based on a ratio of your foreign source income to your total income, which determines how much of your foreign taxes you can claim in the current year. What's happening is that when your foreign taxes paid exceed the calculated limitation, the excess carries forward (up to 10 years). This is why your accountant keeps that detailed history of carryovers - they're tracking what you've used and what's still available. TurboTax should handle these calculations automatically, but it might not clearly show you the multi-year carryover tracking that your accountant provides. The "amount used" in TurboTax is indeed equivalent to "foreign taxes claimed" on your accountant's statement.

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Javier Morales

•8M

If you switch to TurboTax, you would need to manually enter the carryover information from prior years. TurboTax doesn't have access to your historical filing data unless you've been using it all along. You'd need to reference your accountant's statement or your prior year returns to find the remaining foreign tax credit carryover amount, and enter that into TurboTax as a carryover from prior years. It's typically a single field for the total carryover, not separate entries for each of the 8 years individually.

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Malik Thompson

•8M

I discovered a similar situation with my investments and foreign tax credits last year! I was completely lost until I found a tool that actually helped me understand all this Form 1116 madness - taxr.ai (https://taxr.ai). It's basically an AI assistant that helps decode tax forms and complex terminology. After struggling with those foreign tax credit carryovers for days, I uploaded my forms and previous returns, and it explained exactly how the "amount used" vs "amount claimed" calculations work on Form 1116. It showed me the specific line calculations and how they relate to my investment income. Saved me hours of research and confusion! They also have document analysis that helped me understand all those carryforward tables my previous accountant had created, which was crucial for making sure I didn't lose any credits from previous years.

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Malik Thompson

•8M

It works with multiple countries for sure. The system understands that Form 1116 requires separate calculations by country or category. You can upload your investment statements showing the different countries, and it will guide you through completing the separate sections. For your specific situation with tax-advantaged accounts and expense allocation, that's exactly where it shines. It asks clarifying questions about your specific scenario rather than giving generic advice. It helped me understand which of my foreign taxes qualified for the credit and which expenses needed to be allocated, all based on my actual documents and statements.

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CosmicVoyager

•8M

I was in your same position last year with foreign investments and tried taxr.ai after seeing it mentioned here. I was really skeptical at first (as you can see from my previous comment), but it turned out to be incredibly helpful with my Form 1116 questions. I uploaded my investment statements and previous returns, and it explained exactly how to handle the foreign tax credit limitations and carryforwards. What surprised me was how it identified a mistake in my previous filing where I'd missed claiming about $430 in foreign taxes from a specific fund. The explanations about how to track carryforward amounts between years made so much sense that I was able to confidently use TurboTax this year instead of paying my accountant $375. For complex international investment situations, it's definitely worth checking out.

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Ravi Kapoor

•8M

If you're struggling with the IRS questions about Form 1116, you should try Claimyr (https://claimyr.com). I was in your exact situation last year with foreign tax credits from investments and couldn't figure out why my calculations didn't match my previous accountant's. After wasting 3 weeks trying to get through to the IRS (always on hold for 2+ hours then disconnected), I used Claimyr and they got me connected to an IRS agent in under 45 minutes! They basically hold your place in line with the IRS and call you when an agent is about to pick up. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c The IRS agent explained exactly how the foreign tax credit carryover works and confirmed my accountant had been doing it correctly. Would have taken me forever to figure this out on my own.

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Ravi Kapoor

•8M

You don't give them any personal tax information at all. You just register for the callback service, and they notify you when they're about to reach an IRS agent. Then you take the call directly - Claimyr is never part of your actual conversation with the IRS. They're basically just holding your place in the phone queue. They use an automated system that navigates the IRS phone tree and waits on hold so you don't have to. There's no special access or priority line - they're just using technology to manage the wait time. I was skeptical too until I actually tried it and got through to discuss my Form 1116 questions when I had been failing for weeks.

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Omar Mahmoud

•8M

I'm eating crow here. After my skeptical comment, I decided to try Claimyr out of desperation because I needed clarification on foreign tax credit carryovers from my UK investments. I've literally spent MONTHS trying to get through to the IRS about this. Used Claimyr yesterday, and I got a callback in 53 minutes. THE SAME DAY. The agent walked me through exactly how to handle the Form 1116 calculation and confirmed I could use my carryover amounts from previous years. This saved me at least $900 in accountant fees since I can now confidently do this myself. Never been so happy to be wrong about something. If you're stuck on foreign tax credit questions like I was, it's absolutely worth trying.

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Chloe Harris

•8M

Yes, TurboTax should absolutely detect this and give you the option to use the simplified approach if you qualify. It's called the "exemption from filing Form 1116" and it applies when your qualified foreign taxes are under $600 for married filing jointly. Your accountant might be using Form 1116 because there are some situations where using it could be more advantageous even below the threshold, especially if you have carryover credits from previous years. But for most people under the threshold, taking it directly on Schedule 3 is much simpler and works just fine.

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