Foreeign Tax Credit

[Anonymous]

My broker has sent me a 1099-DIV form indicating that I have paid about $750 in foreign taxes to "various" countries. I assume this is passive income.

1.  Am I allowed to take a tax credit for this amount?
2. If so, what data do I need and how do I enter that data into Turbo Tax.

[sjlocke]

You enter in the info for the DIV and then later TT will generate the 1116 for the credit.  Be warned, if you have a carryover, TT won't be able to do that until 3/31 and you won't be able to efile.

[HelenC12 · Accepted solution]

Yes, you can claim the foreign tax paid on your income tax return. TurboTax will let you know if your eligible and if the credit or deduction is more beneficial. 

All you need is your Form 1099-DIV. Both the credit and the deduction are entered in the same place. Enter the 1099-DIV form and you'll be prompted to answer questions about your foreign taxes paid.

In most cases, taking the credit works out better than the deduction. We'll help you decide which one's best for you when you go through this section.

If you choose to take the credit (most people do), we'll attach Form 1116, Foreign Tax Credit if your situation requires it.

Note: You won't be able to take a credit or deduction for taxes paid (or accrued) on excluded foreign earned income or housing. This is because excluded income and housing isn't taxed in the first place.

Related Information:

• What does or doesn't qualify for the Foreign Tax Credit?
• Why doesn't the foreign tax credit show up on Schedule 3, Line 1 of my 1040?
• Can the Foreign Tax Credit be carried over or carried back?
• Do I need to report foreign income?

[Anonymous]

Thanks for your help, although I had a number of complications when I did the following (hopefully this might prove helpful to others facing this issue):

1. When I was asked "Where did you receive Dividend Income From?" I chose various.
2. When I was asked to Report Income, I selected copy of Form 1099-DIV that applied to various."
3. When I was asked to Report Foreign Source Income, I extracted the information from the "details" of my 1099-DIV provided by my broker.
4. Then, as I recall, when Turbo Tax did its check of my return, I selected column A on form 1116 and filled it in as follows: Name of Country - Various, Interest and Dividends - as determined in item (3) above, Foreign taxes paid (as determined from my 1099-DIV.
5. I'm not sure how much of the 1116 form I needed to fill out, but unless column A was filled out with the Foreign taxes paid, the credit was not applied to my return