I have one 1099-DIV with foreign taxes from four countries and one catch-all (various). Plus, I have foreign taxes from a stock in a brokerage account where I don't have a 1099-DIV. I tried to list all of the countries on the 1099-DIV in TurboTax desktop version but it only lets me do one country. How do I add the data for all the countries? If I can't do this using step-by-step, can I switch to forms view and prepare the 1116 forms?
A significant shortcoming of TT is that if you have to fill out Form 1116, it can support only one country per Payer. In the past, if there were more countries than Payers, using “Various” was the technique used to restore the 1 to 1 country/payer ratio. The following technique restores this 1 to 1 ratio by creating additional payers to equal the number of countries.
This addresses the issue of a 1099-DIV with Box 6 showing foreign tax paid to multiple foreign countries and it is necessary to identify and list the countries individually on Form 1116. This is done by utilizing Dummy 1099-DIV's as illustrated by the following example.
We have a 1099-DIV with Box 6 displaying the total tax paid to 3 foreign countries we will call “A”, “B”, and “C”.
Navigate to the “Here’s the dividend info we have so far” screen displaying the name of the Payer. This will be our Main Screen. Bring the Payer up in EDIT mode. Change Box 6 to the amount paid to “A”. Click “Continue “. Either the Main Screen will appear or 2 consecutive screens asking for dividends paid and the source country. If the latter occurs, insert the data for “A”, then continue to the Main Screen.
Click on the New Payer button. We will name this Payer “Dummy1”. In Box 1a, put a zero. This prevents TT from issuing an error. In Box 6, enter the tax paid to “B”. Leave the remaining boxes blank. Click “Continue” back to the Main Screen.
Again open up a New Payer. We will name this “Dummy2”. Put a zero In Box 1a and in Box 6 the tax paid to “C”. Click “Continue” back to the Main Screen.
Now when we go to the Foreign Tax Credit Interview Section, we are positioned to enter all the necessary data for each country individually.
Now we consider countries “D”, “E”, “F” etc.
When multiple copies of form 1116 are needed, they have to be created in the right order.
Using TT’s special instructions as a guideline, the following strategy is suggested. Assign to “A” the largest tax paid, then to “B” the 2nd largest and so on through to “F”. Then when we enter the Foreign Tax Credit Interview Section, we run them through in the same order; greatest to the least.
You may find on part 2 of Form 1116, it is necessary to type in the date for the fictitious Payers which will be the same as the actual Payer, usually 12/31/2017.
You may find it convenient to assign each fictitious payer the same name as the country it represents. This will facilitate matching countries and payers in the FTC section.
P.S. If that "various" represents a mutual fund, the country is "RIC" (regulated investment Company).
A significant shortcoming of TT is that if you have to fill out Form 1116, it can support only one country per Payer. In the past, if there were more countries than Payers, using “Various” was the technique used to restore the 1 to 1 country/payer ratio. The following technique restores this 1 to 1 ratio by creating additional payers to equal the number of countries.
This addresses the issue of a 1099-DIV with Box 6 showing foreign tax paid to multiple foreign countries and it is necessary to identify and list the countries individually on Form 1116. This is done by utilizing Dummy 1099-DIV's as illustrated by the following example.
We have a 1099-DIV with Box 6 displaying the total tax paid to 3 foreign countries we will call “A”, “B”, and “C”.
Navigate to the “Here’s the dividend info we have so far” screen displaying the name of the Payer. This will be our Main Screen. Bring the Payer up in EDIT mode. Change Box 6 to the amount paid to “A”. Click “Continue “. Either the Main Screen will appear or 2 consecutive screens asking for dividends paid and the source country. If the latter occurs, insert the data for “A”, then continue to the Main Screen.
Click on the New Payer button. We will name this Payer “Dummy1”. In Box 1a, put a zero. This prevents TT from issuing an error. In Box 6, enter the tax paid to “B”. Leave the remaining boxes blank. Click “Continue” back to the Main Screen.
Again open up a New Payer. We will name this “Dummy2”. Put a zero In Box 1a and in Box 6 the tax paid to “C”. Click “Continue” back to the Main Screen.
Now when we go to the Foreign Tax Credit Interview Section, we are positioned to enter all the necessary data for each country individually.
Now we consider countries “D”, “E”, “F” etc.
When multiple copies of form 1116 are needed, they have to be created in the right order.
Using TT’s special instructions as a guideline, the following strategy is suggested. Assign to “A” the largest tax paid, then to “B” the 2nd largest and so on through to “F”. Then when we enter the Foreign Tax Credit Interview Section, we run them through in the same order; greatest to the least.
You may find on part 2 of Form 1116, it is necessary to type in the date for the fictitious Payers which will be the same as the actual Payer, usually 12/31/2017.
You may find it convenient to assign each fictitious payer the same name as the country it represents. This will facilitate matching countries and payers in the FTC section.
P.S. If that "various" represents a mutual fund, the country is "RIC" (regulated investment Company).
This technique allowed me to enter only two countries. The extra Dummy 1099s didn't get collected by TT and their countries don't show in the list of countries for later in the interview.
Bring up the 1099-div worksheets. You should see a separate worksheet for all payers, actual and fictitious. On the fictitious payers, make sure box 1a has a zero and box 6 has an entry.
Thank you. Your suggestion to go to Forms View is very helpful: there I can see all the info I entered and where information is missing. Apparently the dummy forms entered in the Step-by-Step approach did not trigger the expected follow-up interview.
I need someone to walk me through foreign tax credit with multiple countries. That 4 page book you wrote I cannot follow. I can't even find the starting page.
Help please.
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This situation (multiple foreign countries paid tax on dividends) is still not fixed in 2020. Also - this is not a "complex tax situation" it's actually quite simple it's just that TurboTax has serious programming lapses to handle this simple situation accurately.
OK I used the technique presented by rogge1722 above and it works fine. Just be careful to click through to the worksheets "Forms" button in top right to ensure that there aren't errors. You'll want to link the custom 1099-DIVs to an 1116 Worksheet. Sometimes the worksheet will list i and j income (cap gains and collectibles). not sure why it does this but I just zero them out and ensure all dividend from 1099-div is attributed in the worksheet as a dividend from schedule B and is qualified. This is probably way too complicated for 99.99% of turbotax users but alas.
The worksheets might work - the suggestion of creating dummy 1099s was ridiculous! I did this - turbotax wouldn't let me take the foreign tax credit because I had "excess taxes" - I assume it was because there was no income on the 1099s - to fix that I had to add in the dividends associated with the tax on each dummy record - and remove it from the primary record. THEN turbo tax errored out because the qualified dividends on the primary account were higher than the total dividends. So, I had to figure out the qualified for each country.
Turbo tax put in soooo much effort to check for errors (when I can import directly from my broker with no errors) but can't bother to fix this so I can attribute more than one country to a 1099? This is a simple fix - come on turbo tax!!
Thanks, @rogge1722. Your answer worked for me, after one additional discovery, and modifying original 1099-DIV info as @peters1050 mentioned.
I needed to enter foreign tax from six countries, but couldn't figure out how to specify more than four.
On the "Where Did You Receive Dividend Income From?" screen, there are only four dropboxes in the "Country" box, and no obvious way to enter more than those. However, almost by accident, I found that if you hover within the "Country" box (outlining the four droplist) and use the scroll wheel on your mouse, it will scroll up, revealing more blank ("not applicable") droplists, which you can then use to enter additional countries.
Also, on the 2019 1099-DIVs, Foreign Tax Paid is now Box 7.
I have 17 countries and RIC. I was able to enter each country, but only one dollar amount resulting in the 1st Country I entered being placed onto the 1116 with all the dollars. How do I enter the dollars for each country individually?
Yes, you can switch to Forms if you are not able to enter the dollars for more than one country.
How do I view and delete forms in TurboTax Online?
Here is a TurboTax article about the Foreign Tax Credit.
@64dancer
TT just needs to fix foreign tax credit so a person can enter more than one country in the interview screen.
If you have foreign income from more than 3 countries you can create additional Forms 1116 and enter then information in the forms mode. To create an additional Form 1116 do the following:
1, Go to the 1099-Div form that you are using.
2. In box 7 doubleclick to link a form 1116.
3. A popup entitled Link to Form 1116 comes up. Near the bottom of that popup window you can enter a name for a new form and select link. This creates a copy of the current form and you can edit it manually to add another 3 countries.