My husband's accountant has filed Form 1116 for the dividend income from his IRA (which is partially invested in an international fund) for years. Do I need to do this?

The accountant made several errors in the past years, and we are now using TurboTax to file. I have already fully entered information from the 1099-DIV, including the foreign tax paid. I believe this is sufficient under the simplified method, but I want to make sure.

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1 Best answer

Level 7

Jun 4, 2019 7:19:09 PM

No, you do not need to file Form 1116 if you meet the requirements to use the simplified method for the foreign tax credit.

Claiming Without Filing Form 1116

You can elect to claim the credit for qualified foreign taxes without filing Form 1116 if you meet all of the following requirements:

All of your foreign source income is passive income, such as interest and dividends,
All of your foreign source income and the foreign income taxes are reported to you on a qualified payee statement, such as Form 1099-INT (PDF), Form 1099-DIV (PDF), or Schedule K-1 from a partnership, S corporation, estate or trust, and,
The total of your qualified foreign taxes isn't more than the limit given in the Form 1040 Instructions for the filing status you're using, or in the Form 1040NR Instructions (if you file Form 1040-NR).

If you claim the credit directly on Form 1040 or Form 1040-NR without filing Form 1116, you can't carry back or carry forward any unused foreign tax to or from this year.

https://www.irs.gov/taxtopics/tc856.html

Level 7

Jun 4, 2019 7:19:08 PM

Are you sure, the dividends are from within the IRA? They should not be reported in a 1099DIV. Foreign paid taxes on income within an IRA are not deductible

Level 7

Jun 4, 2019 7:19:09 PM

No, you do not need to file Form 1116 if you meet the requirements to use the simplified method for the foreign tax credit.

Claiming Without Filing Form 1116

You can elect to claim the credit for qualified foreign taxes without filing Form 1116 if you meet all of the following requirements:

All of your foreign source income is passive income, such as interest and dividends,
All of your foreign source income and the foreign income taxes are reported to you on a qualified payee statement, such as Form 1099-INT (PDF), Form 1099-DIV (PDF), or Schedule K-1 from a partnership, S corporation, estate or trust, and,
The total of your qualified foreign taxes isn't more than the limit given in the Form 1040 Instructions for the filing status you're using, or in the Form 1040NR Instructions (if you file Form 1040-NR).

If you claim the credit directly on Form 1040 or Form 1040-NR without filing Form 1116, you can't carry back or carry forward any unused foreign tax to or from this year.

https://www.irs.gov/taxtopics/tc856.html

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My husband's accountant has filed Form 1116 for the dividend income from his IRA (which is partially invested in an international fund) for years. Do I need to do this?