Foreign dividend income reported incorrectly in 2022: should I file a amended return?

[laura_borealis]

I erroneously reported my foreign tax paid where I should have entered total foreign dividend income in 2022.

TurboTax did not catch this!

The impact on my 2023 return would be foreign tax carryover from 2022: $103 (instead of $290, with the 2022 reporting error).

I was not going to file an amended return for 2022, as it only results in the IRS owing me a couple of hundred dollars more than I actually got in my refund.  But the problem is that it will affect my 2023 return, which I have not yet filed. It is too late to get the IRS to confirm their calculation on this foreign dividend income error by the time I need to file my 2023 return.

My question is: shall I just go ahead and file my 2023 return, then send an amended return for 2022? Will I also have to amend my 2023 return? 

[MarilynG1]

Yes, you probably should Amend your 2022 return within the three-year window for the incorrect Foreign Dividend Income amount reported.

Although Foreign Tax Paid is reported on a 1099-DIV, the amount of corresponding Foreign Dividend Income is often on a supplemental statement from your broker, which needs to be entered in the Foreign Tax Credit interview. 

Is this 2022 error affecting your 2023 return as you have an incorrect carryover amount for Foreign Tax Credit?   If so, you can Edit the carryover amount in TurboTax on your 2023 return to be the correct amount, so you wouldn't need to amend your 2023 return also. 

Otherwise, if you can clarify the issue with your 2023 return, we'll try to help.

Here's more detailed info on Claiming the Foreign Tax Credit. 

[laura_borealis]

Thank you, I have the necessary information to correct the carryover, but do not see where to do so. There is no screen that allows me to explcitly amend the foreign tax credit carryover from 2022 on my 2023 return as I prepare it. How do I do that?

[DaveF1006 · Accepted solution]

You would need to amend your 2022 return as there is no provision for you to amend 2022 in the 2023 return.

To amend your return using Turbo Tax Online.

1. Log into Turbo Tax
2. Select Scroll down Your tax returns & documents in your landing page.
3. Select Amend (change) 2022 return.

To amend using the 2022 Desktop Software, go to:

1. Federal Taxes
2. Other Tax Situations>other tax forms
3. Amend a return

Once you begin amending, you would report the 1099 DIV information:

1. Federal>wages and income>
2. Interest and Dividends>Dividends on 1099 DIV
3. Here you can correct the Dividend information to reflect the correct amount of dividend income received. When you record information regarding the income in the 1099 DIV, check the box that says My Form has other information in more than these boxes and enter the Foreign Tax paid in Box 7.
4. if you did not receive a 1099 DIV for 2022, you will need to complete form 1116. The program will recognize you paid foreign taxes however and will only have you report the country where the Dividend originated.
5. Now scroll through the rest of the entries until you are done.  If you are able to claim the full credit, there is no carryover into the next year unless there were carryovers prior to 2022.

After this is done, revisit your 2023 return to make adjustments. Scroll through your entries until you reach the Foreign Tax Carryover screen.  In the very next screen, you can make the adjustment along with an explanation why the adjustment is being made. When making this adjustment, you will place a negative sign in front of the amount excluded from the carryover and not in the column that says Section 905(c) redetermination.  In top of the column, you will need to include a brief explanation for the change.

@laura_borealis