Any excess losses can be carried forward to a future year. Schedule D looks more complicated to fill out than it actually is. The form is not intuitive. Nor is it easy to understand how the long list of calculations leads to the correct result. As a consequence, Mark Luscombe, a tax analyst at CCH Inc., a legal publisher, recommends simply following the instructions line by line.
Deductions provide only a partial offset.
But Congress eased the reporting requirements for small investors. Most individuals no longer need to fill out Form 1116 to claim the foreign tax credit. Instead of filling out a separate return for your child, you can include the income on your own return and attach Form 8814. But you may be able to save some taxes for your family by filing a separate return for your child. Additional income is taxed at the parents' rate, which may be a lot higher.