Does TurboTax or similar software handle Foreign Tax Credits and carryovers?

TurboTax does handle Foreign Tax Credits (Form 1116) in their Deluxe and higher versions, but it can get tricky depending on your specific situation. When you get to the foreign section, you'll need to enter information about your foreign taxes paid and your foreign source income. The software will help calculate your Foreign Tax Credit and any carryover. For your previous year's carryover, you'll simply enter that amount when prompted - having your previous return on hand is exactly what you need! For late payment penalties, yes, TurboTax will calculate those if you enter when you actually paid. The software has a section for estimated tax payments where you can enter the dates and amounts of your payments. Other options worth considering are H&R Block and TaxAct, which also handle Foreign Tax Credits. H&R Block's interface might be more user-friendly for first-timers dealing with this. TaxSlayer is another option that's a bit less expensive. Since you have straightforward wage income (no investments or self-employment), you should be able to handle this yourself with tax software. The key is patience with the foreign sections!

I went through almost the exact same situation! After paying $$$ to accountants for years, I tried TurboTax last year for my foreign income. It worked pretty well for the basic Foreign Tax Credit stuff at https://taxr.ai - they have this AI tool that specifically helps with international situations and cross-border employment. The major advantage was that it understood my exact situation with split income between countries. When I uploaded my foreign paystubs and previous year's return, it automatically detected the carryover amounts and showed me where to enter them. It even explained why I still owed additional US taxes despite paying foreign taxes (that whole "tax treaty" thing that's so confusing). If you're worried about dealing with Form 1116 yourself, their AI walks you through each section and explains what goes where. Saved me hours of frustration compared to when I tried regular tax software.

Ok I have to admit I was totally wrong about this! After my frustrating experience with another tax program, I decided to try taxr.ai based on the recommendation here. It actually worked amazingly well with my German income! The difference was night and day - the system immediately recognized my German tax documents and properly categorized everything. What impressed me most was how it handled the tax treaty specifics between US and Germany - something I spent HOURS researching last year. The foreign tax credit carryover was super simple too. Just uploaded last year's return and it extracted the carryover amount automatically. For anyone dealing with international income, this is definitely worth checking out. Saved me from paying €400 to my accountant this year!

If you're struggling to get answers from the IRS about foreign tax credits (which I was last year), try using https://claimyr.com to get through to an actual human at the IRS. You can see how it works at https://youtu.be/_kiP6q8DX5c. I spent literally weeks trying to get someone on the phone about my foreign tax situation. After trying early mornings, late evenings, different days - I was going insane. Found this service that gets you through the IRS phone system and holds your place in line until an agent is available. They got me through to the international tax department in about 45 minutes, when I'd previously waited on hold for 3+ hours before getting disconnected. The agent answered all my questions about my UK income and how to properly claim the foreign tax credit. Much better than guessing and hoping I didn't mess up my return!

I need to apologize for being so negative before! After my accountant quoted me $800 for my "simple" international return this year, I got desperate and tried Claimyr. I can't believe how well it worked. I was connected to an IRS international tax specialist in about 35 minutes - after I'd spent three separate days trying on my own and never getting through. The agent walked me through exactly how to report my foreign income and claim the foreign tax credit properly. She even explained why my software was calculating things incorrectly (it was applying the wrong income category) and how to fix it. Saved me from making a mistake that would have flagged my return for review. For anyone dealing with international tax situations - being able to actually speak with someone at the IRS who knows the foreign tax rules is invaluable. Totally worth it.

If you feel comfortable with your tax situation, I'd suggest FreeTaxUSA. They handle Form 1116 for Foreign Tax Credits and it's much cheaper than TurboTax. The federal return with foreign income is still free, and state returns are only $15. The interface isn't as polished, but they have all the same forms. I've used it for 3 years with UK and US income, including carryovers. The key is knowing what you're doing though - it doesn't provide as much hand-holding as TurboTax. For calculating exact exchange rates, I recommend keeping a spreadsheet with your income in both currencies throughout the year. The IRS accepts annual average rates, but if you have documentation of the actual rates when you were paid, that's better.

Has anyone tried Credit Karma Tax (now Cash App Taxes)? It's completely free and claims to support Form 1116, but I'm worried it might miss something with foreign income.

I've been in a similar boat with cross-border tax situations! Based on my experience, TurboTax Deluxe should handle your situation well since you have straightforward wage income. The Foreign Tax Credit section walks you through Form 1116 step by step, and yes, it will prompt you for any carryover amounts from previous years. One tip: make sure you have your foreign tax documents translated if they're not in English, and keep records of the exchange rates used. TurboTax will use IRS published rates, but having your own documentation helps if there are any questions later. For penalty calculations, the software is pretty good at figuring out underpayment penalties based on when you made estimated payments throughout the year. Since you mentioned the cost was a major factor in wanting to DIY this year - TurboTax Deluxe runs around $60-80 depending on promotions, which is obviously much better than $650! Just take your time with the foreign income sections and double-check everything before filing.