When should you elect to use the Simplified AMT Foreign Tax Credit Limitation? This is my first year claiming FTC and I don't understand how I should answer this.

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When should you elect to use the Simplified AMT Foreign Tax Credit Limitation? This is my first year claiming FTC and I don't understand how I should answer this.

if your foreign income is of general category ( wages, interest income etc. ) then you are correct in using the simplified method. If you have incomes from many categoreis, including trusts, complicated investment portfolios etc. and / or multi category carry over credits, do not choose simplied method.

‎June 7, 2019 4:03 PM Returning Member

When should you elect to use the Simplified AMT Foreign Tax Credit Limitation? This is my first year claiming FTC and I don't understand how I should answer this.

What about income from the sale of a rental property? ‎June 7, 2019 4:03 PM

When should you elect to use the Simplified AMT Foreign Tax Credit Limitation? This is my first year claiming FTC and I don't understand how I should answer this.

That is capital gain/ loss .
You enter this just as if the property disposed was in the USA --- Tell TurboTax that you have assets that were disposed in 2018. All your basis, sales proceeds etc. must be converted to US$ of the day -- the exchange rate being based on US Treasury, known sites, or bank in the country where the transaction took place. Any taxes paid on this gain/loss situation to a foreign taxing authority is eligible for foreign tax credit or deduction ( if use itemized deduction )
If you need more on this , please include your questions in comments and I will circle back

‎June 7, 2019 4:03 PM

When should you elect to use the Simplified AMT Foreign Tax Credit Limitation? This is my first year claiming FTC and I don't understand how I should answer this.

How can I determine if I've used this method on a past return?

‎February 18, 2020 2:38 PM Expert Alumni

When should you elect to use the Simplified AMT Foreign Tax Credit Limitation? This is my first year claiming FTC and I don't understand how I should answer this.

If this is the first year you claim the foreign tax credit, you would check the box for "First year I am eligible for the election".

The other two options are for if you have claimed the foreign tax credit and made the election in the past. Please continue to read:

For foreign tax credit, there seem to be 2 elections that can be made:

  1. If the amount is less than $300 (or $600 for married filing jointly) then you can claim FTC without filing Form 1116. [1]. This amount can also be used directly as FTC for AMT purposes. [2]
  2. If you have both AMT and FTC, then you can elect for "Simplified Limitation" which lets you use the same foreign source income for AMT as for regular taxes.

The second election has the condition that you have to make the choice the first time you have the option and that applies for all later tax years

You may elect to use a simplified section 904 limitation to figure your AMTFTC. If you do, when figuring your AMTFTC, you will use the same net foreign source income for AMT that you used for regular tax. (The amount on line 17 of your AMT Form 1116 will be the same as the amount on line 17 of your regular tax Form 1116.) You must make the election for the first tax year after 1997 for which you claim an AMTFTC. If you don’t make the election for that year, you may not make it for a later year. Once made, the election applies to all later tax years and may be revoked only with IRS consent. [3]

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