Form 1116 Comp Wks - Reposting

[Bob-777]

I posted this request on June 20 and have not received a response.  Therefore, I am trying again:

I am having difficulty with Part I of this worksheet.

I have amounts entered in line 1c (interest and dividends) for three columns: A, B, and C.  A is a single country, B and C are RIC's.  I then go down to line h to enter Qualified Dividends and Capital Gains.  In column A, the entire amount is Qualified so I entered the same amount as line 1c.  However for columns B and C, according to my 1099div, something less than the total amount is designated as qualified.  If I enter less than the total, the difference between the total on line 1c and the amount I enter on 1h shows up on line 1g, ordinary income.  I then get a red error message.

For example, if total dividends on line 1c are $10,000 and the qualified amount on line 1h is $0, the difference of $10,000 ends up on line 1g.  But the problem is I have a red error message.

The only way I can get rid of the red error message is to make the qualified amount on line 1h equal to the total amount on line 1c.  The ending answer of the foreign tax credit allowed is correct, but the qualified amount on line 1h is not the amount reported on my 1099div.

[pk]

@Bob-777 , hello, I saw your question recently but it was more than three weeks old and so assumed  that you did not need help anymore.  Let me look into this and will be back  shrotly.

What I understand is that  (a) you have  dividends  with foreign taxes paid from three sources ;  (b)  some is reported as qualified ; (c)  you report these  i.e.  two RICs, one foreign but with qualified divs ; (c) the resulting  1116 does not look right and does not match  the 1099-div.

Please can you confirm  --  1.  Box 1(a) shows total dividend;  1(b)  shows  qualified  dividends .  2.  Box 7 shows the total foreign taxes paid;   3.  Box 8 shows the foreign countries  where foreign taxes  were paid.  4. Do you have information on the foreign incoke associated with these foreign taxes  -- either direct info from  broker or per the information sheets  when you are using broker statement -- for  Mutual funds often you will see this a percentage  of investment / income total.

 Also note that mostly foreign entities declaring dividends are  NOT qualified  dividends .

Please answer my questions while I look at your issue 

pk

[Bob-777]

The information you listed for box 1a, 1b and 7 are what is listed on the 1099 Div. The broker also provided additional detail on the breakdown of the qualified and nonqualified dividends by each of the mutual funds in the account.  That additional detail is what I used to fill out the information on the Form 1116 worksheet in Turbotax.

Part 1 of the 1116 worksheet is where I entered this detail.  On line 1c, I entered the total interest and dividends for the account.  This total was carried forward to line 1f.  Then on line 1h, I entered the qualified dividends from the detail provided by the broker.  After I entered the amount on 1h, Turbotax automatically entered an amount on line 1g which was the difference between the amount on 1f and 1h (1f-1h=1g).  However, the resulting value in 1g is highlighted in red and there is a red error message on the left side where the form is listed (I am in forms view).

[pk]

@Bob-777  , hello  -- first thank you for all the information.  I cannot exactly duplicate your situation yet  but see hints of why the error message.  Could you do me the favor of supplying the following info  ( nothing that is personally identifiable ) --- 1099-div -- 1(a), 1(b), , 7   and from your broker's statement -- foreign source  income  and taxes paid for each of the countries involved.  Also why do you say the qualified  divs  are also foreign -- ?

Any help is much appreciated

pk

[Bob-777]

In the worksheet, Part 1,

Column A: 1c = $1,000, 1f = $1,000, 1h = $1,000

Column B: 1c = $93,000, 1f = $93,000, 1h = $44,000, 1g = $49,000. The error message is in the cell for 1h.

Column C: 1c = $13,000, 1f = $13,000, 1h = $8,000, 1g = $5,000. No error message.

So, why can column C not result in an error when it has a similar situation as column B, i.e. qualified dividends less than total dividends?

[pk]

@Bob-777 ,  thank you for the additional info provide by you.

(a)  since I did not have details of the 1099-DIV i.e. total dividends; qualified dividends and total foreign taxes paid;

and 

(b) based on your earlier comment  & additional  details as to  total and qualified  dividends for the three  foreign  sources of income ( country A , plus two RICs ),

I  created a new return, starting with 1099-DIV, entering a dummy foreign  taxes paid -- $6000, ; chose to take Foreign Tax Credit. This resulted in creation of a new  form 1116. Now I went into forms mode  and  filled out the 1116 worksheet per the information you provided  ( Col A  country Australia, Col B and C being RICs )  eg. line 1(c) and line 1(f) for each column.   The results were as expected  and  NO ERROR.

So I am not sure  that I understand  your issue  i.e. have not been able to duplicate  the issue. 

That brings me back to the actual process of entering -- did you have to over-ride  anything  -- that is only time that you may get  an error .

So I need more info  from you to be able to duplicate  the issue and se why TurboTax is misbehaving.

Please help -- tell me in detail the steps you took to enter the date,  the entries on  1099-DIV ( box by box ).  

pk

[Bob-777]

I originally entered the 1099 div information by downloading the forms from the brokers and allowing the program to enter the information.  This morning, I edited each form to make sure the entries were correct and there was no data override. Everything was OK.

I entered the information on the 1116 worksheet directly using the "forms" view of the program.  I went to that worksheet because the program was showing an error message with the boxes for line 1h highlighted in red. I interpreted this to mean that I needed to enter the qualified dividends attributable to the income and foreign taxes reported in columns A, B, and C.

This morning I did some trial and error experimentation to determine what was the minimum entry required to do away with the error message.  If I entered $0 I received a red error message.  In each column there was a minimum amount required in order for the error message to disappear.  However, the percentage of line 1f varied for each of the three columns.  For column B (the one I was having difficulty with) the minimum entry I had to make was $64,000, about 70% of the line 1f value. (The actual amount of qualified dividends reported by the broker was $34,000.)

I then checked to see how this entry would affect the amount of the Foreign Tax Credit  (FTC) that was allowed on my return (at the bottom of the 1116 worksheet).  The $64,000 amount provided the same amount of FTC allowed as the $34,000 amount.  So, I have concluded that I will leave it at $64K with a note describing the problem if anyone decides to review the entry (which is very unlikely).

So, thanks for your assistance.