How to file Foreign rental property with Foreign tax credit

[gleung · Accepted solution]

I have contacted the support team and the conclusion is "Turbo Tax does not handle foreign rental income with foreign tax credit".

If you have foreign rental income and pay tax for the rental income to that country, do not use Turbo Tax.

My problem is solved by returning my software back to them.

[gleung · Accepted solution]

The worst is TURBO TAX refused to refund.

Worst customer support.

[TurboTaxBrenda]

We apologize that your experience with our phone support team was not satisfactory. We understand that you may have reservations about sharing your screen, but we assure you that we have implemented adequate security measures to protect your information. We request only a few minutes of your time to review your return and locate the issue so that we can resolve it.

 Thank you for your valuable feedback.

[pattersonbanana]

In regards to your issue. I have rental property in another country as well and have used turboxtax for years. I didnt have any issues with delcaring it.  I use the preimer version which it seems like you do as well.

THere is a form you need to use and a dialog box that comes up to enter the information (I believe its other income).   If you want help just email me.   [email address removed]

Robert

[alancharles]

I have to concur with @gleung, that there is an issue with how TurboTax handles the Foreign Tax Credit (FTC). In my case it relates to a capital gain (CG) on the sale of a US property. Per CRA I entered the CG in the 'Real estate, depreciable property and other properties' (area 5) on Schedule 3. As I had first filed with the IRS and paid the the tax on the CG, I am looking to capture the tax paid as an FTC. I entered the tax paid as USD with an exchange rate as 'Foreign Tax Paid' on the 'Foreign' slip, however the amount entered does not  reflect on line 1 -'Non-business income tax paid to a foreign country' (43100) on form T2209 -Federal Foreign Tax Credits. The only way to get this to populate is to add the USD CG amount to the 'Foreign capital gains/losses' line also on the 'Foreign' slip. This now populates 43100 with the correct amount and also adds the USD CG to 'Net foreign non-business income' (43300) for the calculation on line 2 of form T2209. This also flows through as the correct amount on line 128 (Federal Foreign tax credit (40500)) on page 6 of the T1 General.

Sounds great, right?

Unfortunately, the CG also gets reported as 'Capital gains (or losses) from T5, T5013, and T4PS information slips' (17400) on line 14 on page 2 of Schedule 3. This has the net effect of reporting the capital gain TWICE! The capital gain (the calculated amount on line 22 of schedule 3 '2023 taxable capital gains' (19900)) ends up as the entire original CG amount.

I spent 4 hours yesterday with TurboTax support (3 different agents, 2 dropped calls), the third agent was finally able to review my entries via screen sharing, consulted level 2 support and concluded that while I was entering everything correctly, the result was incorrect (double CG as above). The agent suggested that I consult a tax accountant. I'm havng difficulty with this suggestion as I shouldn't have to pay a tax accountant to assist with resolving a TurboTax calculation issue. The agent's second suggestion was to consult the CRA, however my response is similar to that regarding the previous suggestion; the CRA doesn't care that TurboTax doesn't work, nor are they invested (or should they be) in supporting the application in any way.

Furthermore, while reviewing my 2021 tax return on which I had reported a similar gain, I discovered that the 'double CG reporting' issue had occured on that return as well. I made use of the 'ReFILE' functionality within TurboTax 2021 to correct the filing by removing the CG from Area 5 of Schedule 3, however CRA is now asking me to refile Schedule 3 relating to the property sale (CG). While I can submit a manually completed Schedule 3 independently in response to the request and hope that it will satisfy CRA's inquiry, this will not address how to file my 2023 return while satisfying their reporting requirements using TurboTax.

I am interested in any feedback on how to proceed, or if Intuit is truly interested in addressing what appears to be a 'bug' in the TurboTax application.

Any thoughts @TurboTaxBrenda, @TurboTaxGinette, @TurboTaxSusanor @pattersonbanana ?

Oh, and while this thead is marked as 'Solved' IMHO it does not appear to be...

[alancharles]

On further reflection, where this 'bug' appears to be is in the calculation of the 'T5, T5013, and T4PS information slips' (17400) on line 14 on page 2 of Schedule 3. The capital gain amount is entered on the 'Foreign' slip, not on any of 'T5, T5013, and T4PS'and therefore should not appear there.

[gleung]

I gave up with Turbo Tax and used a cheaper better tax software to file my return. I got my tax refund 3 weeks ago. I cannot wait for Turbo Tax to realize it is their problem.

I was frustrated with Turbo attitude: it is not our problem, you should call CRA.

We all understand, it has nothing to do with CRA, it is a bug in Turbo Tax.

The worst is they don't want to refund me without a reason. (Just said: Refund is rejected.)

For me, this is the last time I purchased Turbo Tax. I don't have energy to file for their product refund. 

[TurboTaxBrenda]

Are you using the T1135?

[alancharles]

The short answer is 'Yes'. However this has no bearing on the reporting of income via T1 general for taxation purposes other than to corroborate the value of foreign (US) holdings.

[alancharles]

I've provided a complete rundown of the issue and how to replicate it. Can one of the 'experts' please duplicate these entries on their own to corroborate the 'bug'?