(FYI details: Foreign Income of ~$5400, of which ~$4600 was qualified, with a total of 356.56 in Foreign Taxes.) Did I click on something incorrectly to generate this "Explanation Statement" form or is it now required? Thank you.
One of the most common reasons is an explanation on how a foreign tax credit was calculated. Any expat who wants to claim this tax credit must submit a statement that shows how the amount was calculated. Turbo Tax calculates this in Form 1116 worksheet so this is already attached if you are filing as a US resident. I think your explanation, you wrote in the explanation statement, should cover this very well.
Keep your supplemental disclosure form handy if this is questioned further by the IRS. At this point, I think the form may have been generated at random but save the information anyway in case if further information is requested from you by the IRS.
To clarify, was this explanation of statement supplied to you by your brokerage as part of a supplemental disclosure form?
Hi - thank you for your reply. Yes, there is a page called "2023 Supplemental Information" that's attached to my 2023 1099-DIV brokerage account tax statement.
That Supplemental Information page notes the Country (RIC), Security Description, CUSIP, Nonqualified Dividends, Qualified Dividends, Interest, total Foreign Income and Foreign Tax Paid.
In my draft Turbo Tax "explanation of statement" I made note of all of the numbers included in this Supplemental Info page and stated that I was asking for a Foreign Tax credit of $356.56.
I appreciate any help and insights. 🙂
Many thanks,
Lynn
P.S. I'm just wondering if I clicked something incorrectly within Turbo Tax to generate this extra "Explanation of Statement" form. One wasn't automatically generated in Turbo Tax last year when I was seeking a credit on foreign taxes paid, but this year it was. Maybe it's something new? I don't understand when an Explanation of Statement is generated by Turbo Tax and when one isn't.
I suppose it's not a big deal to just include the form in my tax filing, so I'm mostly curious at this point.
One of the most common reasons is an explanation on how a foreign tax credit was calculated. Any expat who wants to claim this tax credit must submit a statement that shows how the amount was calculated. Turbo Tax calculates this in Form 1116 worksheet so this is already attached if you are filing as a US resident. I think your explanation, you wrote in the explanation statement, should cover this very well.
Keep your supplemental disclosure form handy if this is questioned further by the IRS. At this point, I think the form may have been generated at random but save the information anyway in case if further information is requested from you by the IRS.