[at09]

I made a $5000 contribution to my traditional IRA, and included it in my deductions on Form 1040, Line 32.

When I am filling out Form 1116 (Foreign Tax Credit), should I include this IRA deduction on Line 3b ("other deductions")?

I am having an extremely difficult time finding the answer to this question, and would be so grateful to anyone who can help!

[MukatA]

Form 1116 is for getting credit for taxes paid in a foreign country on the foreign income.
Why are you filing Form 1116? Do you have U.S. source income?

[at09]

Yes, I am a US citizen who moved to the UK last summer. I have both US and UK wages for 2009. I am filing Form 1116 (Foreign Tax Credit) to claim the taxes I paid on my UK wages. I know that I can file an extension and take the Foreign Earned Income Exclusion later this year, but taking the FTC gives me a larger refund.

I am just confused as to whether I should include my IRA deduction (reported on Form 1040, Line 32) on Line 3b of Form 1116.

[ebaines]

Hello AT09. I have no direct expereience in this particular form, but as I read the instructions it seems to me that it would be logical to include your IRA deduction, given that you deducted it on your 1040 (i.e, this is not a Roth account, and you don't exceed the income limit for deducting traditional IRA contributions). My reasoning is that this is part of determining your taxable US income versus your taxable foreign income, so in general deductions that you take in calculating your AGI should be included. Also, if you run the numbers on form 1116 you'll probably find that it makes no difference whether you include it or not.

[at09]

Many thanks, ebaines! My inclination was to include it, but I just wasn't sure. I really appreciate your input!

[at09]

And by the way, thanks for providing such a clear explanation of your reasoning!