@SusanY1,
Quoting from a Learn More link within TT:
- Foreign Country
- The IRS requires the Foreign Tax Credit to be calculated on a country by country basis. Your Forms 1099 and other financial statements that report foreign tax paid should indicate what country the tax was paid to. If you have a statement showing foreign tax paid, but it does not indicate a country, you may need to contact your financial institution to find this information.
And When should I select "Various?":
- Using "Various" to report foreign income
- When you have foreign income from multiple countries, the IRS requires you to report it per country, unless it comes from a Regulated Investment Company (RIC).
- But, sometimes financial institutions don't give you enough info to figure out how much income came from each specific country. In this scenario, we allow you to select "various." You just need to make sure all income you report as "various" falls into the same income category so your tax info will be correct.
- If you're able to break down your foreign income by country, the IRS requires you to report it for each country individually. To do this:
- 1. Go back to Dividends with your Form 1099-DIV (or sometimes it's reported on a Form 1099 or K-1)
2. Report each country's income source on its own form
3. Make sure the total adds up to what's reported on the original form
4. Return to Foreign Taxes to complete the rest of your info - Example: Let's say your Form 1099-DIV reports $1,000 in dividends. $100 from France, $50 from Canada and $850 from the US. Rather than entering one Form 1099-DIV, you'll enter three of them. The first copy is for $850 with no foreign tax since it's US income. The second copy is $100 with foreign tax equal to what you paid France. The third copy is $50 with foreign tax equal to what you paid Canada.
Your product (assuming you represent Intuit) makes it pretty clear that I must break down by country if I am able to. However, your recommended process is painful, putting it kindly. Here it is April 2, 2024 and Fidelity has sent out 3 corrected consolidated 1099s. If I had modified what I had imported, then I suspect that I would have to repeat hacks on the downloaded 1099-DIVs over and over again. Highly error prone and tedious.
Since this has been a problem with your software since at least TY2018, I assume it wont get the love it needs any time soon.
Also worth noting, in order for the Various hack to work, the RIC info must also be lumped in with the ADRs/stocks per country, since having separate RIC and Various lines forces the same hacking on the 1099-DIVs.
As a noob to this problem, here's how I think it should work, at least for the passive category:
- Create a step-by-step flow that asks for the per-country info: non-qualified div, qualified div, interest, total foreign income, and foreign tax paid. I would much prefer a table entry than many screens to click through for each country. Better yet, extract the info automatically from the consolidated 1099 downloaded from the financial institutions.
- Ask to select all the 1099-DIV docs that cover the the country break down. The totals should match.
- TT builds the necessary form 1116s per the IRS requirements (such as 3 countries per form, largest credit on the first form, ...)
