Amount of foreign source income, mutual funds.

[nystaxpayer12]

I own one international stock fund and one international bond fund from from each of two separate mutual fund companies. In previous years, I remember reporting foreign tax paid by Registered Investment Companies having TurboTax calculate Form 1116 and receiving a credit. I do not recall ever needing to report amounts/percentages of foreign source income for each fund, but now Turbo Tax Premier (Desktop) will not let me proceed without these. 

Looking at the 1099s from each company, there is no percentage listed for the bond funds, so do I assume 100%? The stock funds report multiple percentages per fund. Which one do I pick, total ordinary dividends? What about capital gain distributions?

Thank you in advance.

[ThomasM125]

You can't simply assume 100% of the bond income is from foreign sources, you will have to do some research to determine that percentage. That may entail asking for help from your broker. You mention that the fund is a foreign bond fund, that may mean that it only invests in foreign bonds, so if you can verify that then 100% of the income would be foreign.

For the stocks, you may have to look at each fund and use the percentage of foreign income reported and multiply that by the income from the fund to determine the foreign income for that fund. Do that for each fund to determine the total foreign income reported, then back into a percentage to enter in TurboTax to arrive at the correct foreign income reported. Again, since it is a foreign stock fund, if you can verify that the investments are all in foreign securities, then the percentage would be 100%.

The amount of foreign tax credit you qualify for is dependent on how much of your income is from foreign sources. Your foreign income will be divided by your total income to determine what percentage of your income tax is from foreign sources. Your foreign tax credit allowable each year cannot be more than that amount, your tax associated with your foreign income. That is why you have to allow TurboTax to know how much of your income from the funds is from foreign sources.