Yes, this is foreign-sourced income. Here is how you will complete reporting the Foreign Tax Credit. I assume you have already reported this as income because we addressed that earlier. Now you need to fill form 1116 to receive your credit.
TurboTax doesn't save this portion into the Form 1116 like it does for Dividends and interest, so you need to manually record this in the Foreign Tax Credit section.
As you navigate through the foreign tax credit section, your dividend and interest information is already reported. You need to report the sale of the house and report the gross amount of the proceeds..
- Go to Deductions & Credits
- Estimates and Other Taxes Paid > Foreign Tax Credit.
- Follow the prompts
- It will first ask you to report the income for the dividends and interest. In this case, you just need to check a box next to the dividends and interest to record the income.
- After this is done. There should be two country summary screens.
- When you get to country summary screen, select edit next to the country XX that reported the interest.
- Here it will ask you to report other Gross income XXX. You will report the Gross proceeds from the sale.
- Don't enter anything for expenses.
- Continue through the screen until it asks you to enter foreign taxes. Here you will enter foreign taxes on other income.
- Finish out the interview screen until you are done.
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