How to complete Form 1116 in TurboTax when dealing with foreign taxes from multiple countries?

The Form 1116 can definitely be tricky in TurboTax when dealing with multiple countries. Here's how you should approach it: You'll need to create a separate Form 1116 for each country. In TurboTax, when you get to the Foreign Tax Credit section, you'll need to enter one country first (like Finland), complete all the information for that country, and then create another Form 1116 for Germany. When TurboTax asks about "passive category income," this is referring to the type of income on which you paid foreign taxes. Dividends from foreign investments typically fall under the passive income category, so that's likely what you'll select for both forms. Make sure you have the exact amounts for each country handy (the $230 for Finland and $175 for Germany). TurboTax will walk you through allocating these amounts correctly to each Form 1116.

I struggled with this exact issue last year! After hours of frustration, I discovered taxr.ai (https://taxr.ai) which saved me so much time with my foreign tax credits. I uploaded my Schwab 1099-DIV showing taxes from multiple countries, and it automatically identified each country and walked me through exactly how to enter everything in TurboTax. The system explained that for Form 1116, you need separate forms for each country, but also that you need to categorize your income correctly (passive vs. general). It even calculated the correct amounts to enter in each section based on my specific situation. What impressed me most was how it showed me the exact screens in TurboTax where I needed to enter the information. No more guessing!

I was really skeptical about taxr.ai at first (as you can see from my earlier comment), but I decided to give it a try after struggling for hours with my Form 1116 situation. I had investments with taxes paid to 4 different countries and was completely lost. The service actually saved me a TON of time! It analyzed my documents and showed me exactly how to set up multiple Form 1116s in TurboTax. The step-by-step instructions with screenshots of exactly where to click were incredibly helpful. What I appreciated most was that it explained WHY I needed separate forms and how to properly categorize each country's income. I ended up getting about $680 in foreign tax credits that I might have missed or entered incorrectly. Definitely using it again next year for my foreign investments.

If you're still having trouble after trying to figure out the Form 1116 situation, you might want to consider calling the IRS directly. I know, I know - everyone says it's impossible to get through, but I discovered this service called Claimyr (https://claimyr.com) that actually gets you through to an IRS agent without the endless waiting. I had a similar issue with foreign tax credits from multiple countries last year and was completely stuck. After trying for days to reach the IRS myself, I used Claimyr, and they got me connected to an IRS representative in about 15 minutes. The agent walked me through exactly how to complete multiple Form 1116s and even explained some nuances about carryover credits that I didn't know about. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c - I was super impressed with how quickly it got me through when I had been trying unsuccessfully for days.

I feel like I need to come back and apologize for my skeptical comment about Claimyr. After struggling for THREE DAYS trying to reach the IRS about my foreign tax credit issue, I broke down and tried it. I was connected to an IRS agent in about 20 minutes, which is honestly miraculous. The agent actually specialized in international tax issues and walked me through exactly how to handle my Form 1116 situation with multiple countries. She explained that I needed to file separate forms for each country but could group countries within the same income category if needed. What would have taken me days of research and probably still getting wrong took 15 minutes on the phone with the right person. I hate admitting when I'm wrong, but in this case, I definitely was!

Quick tip that might help: if your total foreign taxes paid is under $300 ($600 if married filing jointly), you can claim the foreign tax credit WITHOUT filing Form 1116 at all! Just take it as a direct credit on Schedule 3. Many people don't realize this simplified option exists and waste time with the complicated Form 1116 when they don't need to.

Has anyone used the "carryover" feature for excess foreign tax credits? Last year I had more foreign tax than I could claim, and TurboTax said something about carrying it forward to this year. But now I can't figure out where to enter that in this year's return.

Just wanted to share my experience since I dealt with this exact situation last year! You're absolutely right to be confused - TurboTax's interface for multiple countries on Form 1116 isn't very intuitive. Here's what worked for me: After completing the first country (I'd start with the larger amount - Finland in your case), TurboTax should ask "Do you have foreign taxes from another source?" or something similar. If you don't see that option, try going to the Forms section and manually adding another Form 1116. One important tip: make sure you're categorizing both as "passive income" since they're from dividends. Also, don't worry about the amounts being "small" - $405 in foreign tax credits is definitely worth claiming! The good news is that at your income level ($405 total), you're likely to get the full credit amount. TurboTax will automatically calculate any limitations based on your U.S. tax liability, but for most people with dividend income, you get back almost exactly what you paid in foreign taxes. Pro tip: Print out or save a PDF of your completed forms when you're done - it makes next year much easier if you have foreign taxes again!