How to Elect to Carry Over Foreign Tax Credit When Filing 2025 Taxes

The foreign tax credit rules can definitely be confusing! You're right that there should be a way to choose how much of your foreign tax credit to use in the current year versus carrying it forward. On Form 1116, look at Part III (Figuring the Credit). After you've calculated your total foreign taxes available for credit, you should be able to enter the amount you want to claim for this year on line 19. The difference between your total available credit and what you claim this year will be carried forward. If your tax software isn't letting you make this election, you might need to override it or possibly complete this form manually. The IRS specifically allows taxpayers to choose to claim less than the full amount of foreign taxes paid in the current year, which can be beneficial in your situation where you don't need the full credit.

Just wanted to share my experience with foreign tax credits and carrying them over. I struggled with this exact issue last year using TurboTax which kept maxing out my FTC instead of letting me carry some forward. I found this amazing tool at https://taxr.ai that helped me figure out exactly how to properly allocate my foreign tax credits. You upload your tax documents and it analyzes everything, then explains how to make the election to carry forward unused foreign tax credits. It saved me hours of frustration and helped me optimize my foreign tax credits across multiple years. The tool even provided specific instructions for overriding my tax software to make the proper elections.

I tried that taxr.ai tool mentioned above after struggling with my foreign tax credits for days. Honestly wasn't expecting much since my situation is pretty complex (income from 3 different countries with different tax treaties), but it actually worked amazingly well. It identified exactly where I needed to make adjustments on my Form 1116 to carry forward the excess credits I didn't need this year. It even explained how to handle the different income categories separately. What impressed me most was that it pointed out a mistake I made with my passive income category that would have cost me about $800 in future credits. If you're dealing with foreign tax credit carryovers, definitely worth checking out. Saved me a ton of stress and probably an expensive visit to an international tax specialist.

Hey, so I've been in your exact situation before. After spending HOURS on hold with the IRS trying to get clarification on Form 1116 carryovers, I finally discovered https://claimyr.com which got me through to an actual IRS agent in under 20 minutes. You can see how it works here: https://youtu.be/_kiP6q8DX5c The agent confirmed that yes, you CAN choose how much foreign tax credit to use in the current year! She walked me through exactly how to make the election on Form 1116. Turns out my tax software (H&R Block) was automatically maximizing the credit instead of letting me choose, but the agent explained the exact override process. Saved me from having to file a paper return.

I was super skeptical about Claimyr when I first read about it here (sorry @8), but my foreign tax credit situation was driving me crazy and the IRS website was zero help. So I tried it yesterday and I'm completely shocked - got through to an IRS specialist in about 15 minutes! The agent confirmed everything about making the election to carry over foreign tax credits. She explained that I need to check box "i" in Part II of Form 1116 and enter my own amount on line 19 of Part III. She even explained how to document my election with a statement attached to my return explaining my calculation method. For anyone struggling with Form 1116 and carryovers like me, getting direct IRS guidance was invaluable. They answered questions that no amount of internet searching could resolve.

Something nobody mentioned yet - you need to be careful about the categories of income on Form 1116! If you have both passive and general category income, you need separate Form 1116s for each. And the carryover election works differently depending on the category. I learned this the hard way last year when I tried to carry over some passive category FTCs but accidentally claimed too much general category FTC. My tax preparer had to file an amended return to fix it.

Just to add another data point - this EXACT issue is why I stopped using TurboTax for my foreign tax returns. I switched to TaxAct which actually lets you override the amount on line 19 without jumping through a million hoops.

I went through this exact same issue last year! The key thing to understand is that Form 1116 doesn't automatically force you to use all your foreign tax credits - you absolutely can elect to carry forward excess amounts. Here's what worked for me: On Form 1116 Part III, line 19 is where you enter the amount of foreign tax credit you want to claim for the current year. Most tax software defaults to the maximum allowable amount, but you can manually enter a lower amount if you want to preserve credits for future years when you might have higher tax liability. Since you mentioned having different categories (like passive income), make sure you're filling out separate Form 1116s for each category. The carryover election is made separately for each category. One tip - if your tax software won't let you override line 19, look for an "override" or "manual entry" option in the forms section. Every major tax software has this capability, though they sometimes hide it pretty well! If all else fails, you might need to file a paper return to have complete control over your foreign tax credit elections. Keep detailed records of your carryover amounts since they can be used for up to 10 years. Good luck with your return!