Here is a suggested technique to enter the data for foreign tax credit.
There are X distinct countries. Each country will occupy 1 column in form 1116.
The arrangement is to create X fictitious 1099-DIV’s, each to represent one distinct country. The main 1099-DIV will end up serving only U.S. sources.
Preparation:
I suggest getting the data ready on a spreadsheet. To begin with, for reference, record the amount on both 1099’s boxes 1a, 1b and box 7. Also the amount in schedule B, line 6.
On the spreadsheet, dedicate one column for each country.
Let’s assume that column A is for Canada. From the broker’s supplemental info, insert the ordinary dividends in box 1a. If Canada should be on more than one 1099, then enter them separately then add them up. Do the same for all qualified dividends in box 1b and taxes paid in box 7. These amounts must then be subtracted from the respective 1099’s so that the totals remain constant.
In column B, repeat the same format for the country it represents. Continue on with column C, etc. to the end.
The subtractions can be done piecemeal or any way you like, taking care that it is accurate. When you are done, the main 1099’s will display only the U.S. amounts in box 1a, box 1b and in box 7, make sure they are empty.
Now bring up a blank 1099-DIV. For clarity and convenience, name the payer “Canada.” Fill in box 1a, 1b, and box 7 from the spreadsheet data for Canada. Repeat this format for the remaining 8 countries.
You are now ready to enter the foreign tax credit interview. As they are all passive category, they can be entered without regard to the amount of foreign tax paid as prior postings stated. However, if there is any general category income, that would be an issue. I’ll assume that’s not the case.
During the interview, you will come across a screen header “Report Foreign Tax Paid to (Country). Underneath is “select” and “Dividends paid by”. This screen can display only about 6 payers at a time. The remaining payers are on a succeeding screen. Also you may be asked to submit the date paid for each country. Use 12/31/2020.
