topic Foreign Dividends and form 1116 in Deductions & credits

Foreign Dividends and form 1116

Jan911 — Sun, 16 Feb 2025 21:00:45 GMT

I have Div income from 5 foreign countries but only paid tax on 4 of those countries. in TT home & business Computer version, do I :

1)enter the 5 country total (including non-taxable UK) on personal income paid "Tell us about your foreign Dividends?

2) Indicate the UK as the "other source" Country since it was the largest Div or do I list the the largest foreign tax paid country?

How the hell do you get to list all the other countries correctly on the 1116 especially when you have more than 3 so need at least 2 forms? Since no tax paid to the UK should its Div income be listed at all on the 1116?

Every year I have this issue with TT to get these forms correct - I do remember that I have to delete the forms NOT edit them for each rendition to try to get them correct but does anyone have answers to how to get through the questions correctly?

Re: Foreign Dividends and form 1116

DaveF1006 — Thu, 20 Feb 2025 18:39:30 GMT

Yes, you can report income from several different countries if that is what you choose to do. When you prepare your foreign income credit section, you have the option to add a country in that section and then allocate your 1099 DIV amounts for each country.

My suggestion is not to report the foreign tax paid in Box 7 of the 1099 DIV entry itself but to report it directly in the FTC section. Here you can allocate the 1099 DIV income amount and the foreign tax credit paid on that income. Here are the steps.

Go to Federal
Deductions and credits
Estimate and other taxes paid
Foreign Tax Credit>start or revisit
When it asks We just need to check if you have any uncommon situations indicate I paid foreign taxes on income I earned while working in another country.
At some point in the interview, it will ask if you wish to take a deduction or a credit. If you are able to itemize deductions, you may consider taking the deduction.
There will be questions in the next screen asking you the description of the Foreign Taxes paid and the amount.
If you find that this has no effect on your tax return, you may circle-back and choose you wish to take a credit.
Navigate and record the entries that the program asks for and when you reach the page that mentions Foreign Tax Credit Worksheet, this is where you take notice.
The first that you will be asked is what category of income is it, you will say Passive income.
Next screen will say Country Summary, select add a country
When it says Other Gross Income - XXXX, Here you put in the Gross Amount you earned in that country.
Then you will navigate through the screens until you come to a screen that says Foreign Taxes Paid - XXXX, here is where you record the amount paid under Foreign Taxes.

When you are finished, you may go back to add a country summary to add additional countries to report your additional 1099 Div's.

Re: Foreign Dividends and form 1116

Jan911 — Wed, 05 Mar 2025 15:08:37 GMT

Thanks for your suggestion - but since this has been an ongoing program flaw in TT for past 5yrs, don't you think they should fix the program? TT should be able to properly complete the 1116 forms with multiple foreign DIV and taxes paid - I had to "trick" the system because it can only handle a 1:1 relationship between the 1099 DIV and the 1116 completion. I tricked it by breaking the consolidated 1099 DIV I received into 3 different 1099 DIVs (one for each country of foreign tax), plus altering the original consolidated numbers to account for the removal of the 3 foreign numbers and entered them separately into TT. TT then correctly completed the 1116 form. Oh AND I had to enter them in the proper order because the Feds want the 1116 to be completed in the order of Highest Divs/tax paid vs. alphabetical by country.