Foreign Income

[Rick9464]

Downloaded my brokerage statement.  On 1099DIV I had Germany Income from 2 companies : Daimler Truck Hldg & Mercedes-Benz Group (respectively $510.58 &  $2992.35) for a total of $3502.93

FRom the same brokerage was a 1099 INT for CD Interest for State bank of India. Total Int $409.87 No foreign taxes paid.

Plan to file form 1116 to apply taxes paid to my tax due on the 1040.  On my 1040DIV worksheet, I need to correct errors.  So I will list total foreign income at $3912.80  Qualified is $3502.93.  As you can tell, the difference is the CD interest from India.

For the time being on form 1116  line 7B I linked the form.  Then on line 7C I checked Box A

Now lets go to line 8.  They want to have listed the country.  Since I have Germany and India, I think I need to click RIC. IS THIS CORRECT?  Do I have to show Germany in A and then India in B --How to do this?

Then there is a subline that asks if its a mutual fund (GERMANY IS NOT -STOCK DIVIDEND) OR a regulated investment company.  I dont know if I need to check this box or not?  Germany is stock Dividend and India was CD interest

Hoping someone can easily help clarify how to mark these boxes.  Keep in mind Germany is Dividend and India is Interest - all on the same brokerage 1099.

[DaveF1006]

Yes, in the first instance, you would select various as a option. If that option is not listed as a choice, you would select RIC. When it asks if this is a mutual fund, do not check this box.

[Rick9464]

Dave, I was thinking that I only show the Germany income instead of the "total" foreign income.  My logic is that on the 1099int portion the Foreign interest is listed as taxable income.  So since I will be paying tax on the interest foreign income, I felt that just listing the foreign dividend income would be sufficient and accurate .  The is where the only foreign taxes were paid and recorded on the 1099div portion of the statement.

I wondered if I listed the interest in the total foreign income, I might be double taxed since its already in the 1099int portion.

What do you think?

Also wondered your thoughts on this.  I apply this as a foreign tax credit to my federal tax due.  Based on all the program math, I never get the full amount as a credit to my tax due.  Its always a percentage.  so I now have about 3 years of carry over  that is listed in the TT program.  Will I be subject to eventually losing these carryovers?  Including this year I might have about 1000.00 in total carryover for 3 years.  Really dont know why I cant use the full amount and avoid these carryovers or is there some way I can use them?  OR do we just continue to carry them on and on?

Thanks for your input.

[DaveF1006]

I am not sure what you mean by entering the interest as total foreign income. If you are referring to listing this as other Gross income when working in the Foreign Tax Credit, then no, you will not list this.  This won't double your taxable income but would affect the calculation of your foreign tax credit.

Foreign tax carryover's can be carried back one year or carried forward for the next ten years. If you are unable to take advantage of them by offsetting these with foreign income, they remain until they drop off.

@Rick9464 

[Rick9464]

Hi Dave.  In turbo tax they list the form I am talking about as Form 1116 copy1.  This is the attachment that will be sent when i efile.  I am referencing Column A  where I list the country as Germany.  Line 1 A  asks for Gross income from the country shown above.  That would be Germany.  Re-reading the line, I believe I am right to just list that gross income.  Where I was getting confused was whether or not I had to list the CD Interest I got from India in column B on the 1116 form.  The point I tried to make earlier was that I dont believe there is a need to list this foreign income because the total interest amount was included in my 1099 INT total already.  So I dont believe I have to show this on form 1116 since it will be taxed from the 1099 INT total downloaded from the brokerage.

Hope I explained it better but I think this is what you meant in your last message.  

Lastly, If I am unable to use any of the foreign carryover, if I understand you correctly, the oldest would just drop off each year.  Do I understand this correctly??

Rick

[DawnC]

Yes, it sounds like you understand it, you won't include the 1099-INT you already entered in the foreign tax credit (FTC).   And as Dave mentioned above, foreign tax carryovers can be carried back one year or carried forward for the next ten years.  If you are unable to take advantage of them by offsetting these with foreign income, they remain until they drop off.