I am a US citizen who lives in India. India also taxes its residents on their worldwide income, and has a dual tax avoidance treaty with the US. The treaty defines different types of income, but has no notion of a *primary* country to pay taxes to for any kind of income. And the tax year in India goes from April to March.
(Let us focus on non wage income in this question, where there is no concept of withholding in either country.)
So the way in which things end up working is that for all incomes accruing in Jan - March, one pays Indian taxes on them, and gets a credit on them from the US tax return, simply because the US tax return hasn't been filed for this period when one is filing the Indian tax return (likely in June - July).
OTOH, for incomes accruing in April to Dec, one pays US taxes and gets a credit on them for the Indian tax return.
My question therefore is - how do I report Indian taxes paid on the Jan-March portion of the 1099-DIV income from the US? I tried modifying the "Foreign taxes paid" box of the 1099-DIV that I had imported, but:
- is that even allowed? there was some value already there because the ETF investment had invested in and paid foreign taxes on foreign securities, i had to change it to incorporate the foreign taxes I paid.
- when i added the Indian taxes paid, Turbotax asks me for the portion of the dividend that was from foreign countries, and to specify which countries it was from.
How do I resolve this?
