No. Do not trust the "checked box".If your actual foreign qualified dividends are over $20,000, you are currently in an "unreported" error state.
- First report the dividend in the Interest and Dividend of your income section as a 1099 DiV. Be sure to enter the foreign tax paid in Box 7. You will need to check the box that says My Form has info in other boxes
- After this is entered, there will be a follow-up that will ask you about your foreign dividends. Here you mention the amount of foreign dividends received and the country of origin. This information is usually contained in a supplemental disclosure form that came with your financial statements.
Now go to your foreign tax credit section and the deductions and credit section of your return. As you navigate through the section, you will notice that the section recognized that you have reported this already. Continue through this section until you reach a screen asking if you have "No other income or expenses." Even if it feels true, select NO.
Now, enter the Qualified Amount: This will open up supplemental screens. One will specifically ask: "Any foreign source qualified dividends or long-term capital gains?"
- The Result: If you enter an amount over $20,000, TurboTax will:
- Uncheck the "Adjustment Exception" box.
- then Automatically apply the IRS multiplier (typically 0.4054 for the 15% bracket) to your foreign income on Line 1a.
Now you should be able to trust the program
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