Foreign Tax Credits

[cientax]

I have a client that has paid foreign taxes and we have taken the FTC for each year the taxes were paid. (This is from Canadian Passive income). In 2006 we used 100% of the foreign tax paid. In 2007 we used only a portion of the taxes paid as a FTC but we did not carryback the unused portion. In 2008 which we are in the process of preparing now, we have a very large amount of unused foreign taxes that were paid. My client paid $1588 FT in 2007 and the FTC was $595 but we didn't carry back the unused tax. In 2008 client paid $247000 FT and we used only $46300 FTC.

Should we go back and amend the 2006 to use some of the 2007 FTC then carry forward and amend the 2007 to carryback the 2008 unused tax then carryforward or can we just carryforward the unused 2007 foreign to 2008 and carryforward all of 2008 unused foreign tax. Is it required that we carryback or can we forego the carrybacks?

[jainen]

>>Should we go back and amend the 2006 to use some of the 2007 FTC then carry forward and amend the 2007 to carryback the 2008 unused tax then carryforward or can we just carryforward the unused 2007 foreign to 2008 and carryforward all of 2008 unused foreign tax<<

Slow down and take a breath. You have to take it back before you can take it forward. Generally it's best to claim credits, unless you are in a hurry to let the statute of limitations run out.