I am writing to request assistance with the TurboTax screen entitled “Any foreign source qualified dividends or long term capital gains?"
By way of background, I own an international stock mutual fund in a regular taxable account, and the 1099-DIV reports amounts only in the following boxes:
The supplemental tax reporting information provided by the mutual fund company describes a “standard method” to calculate…
TurboTax, however, reports an error when the calculated foreign source qualified dividends (Box 1a x 80%) is entered, stating that the “foreign qualified dividends and l.t. capital gains” should be at least equal to “total foreign income for this category.” Given the instructions received from the mutual fund company, this is not possible since “Box 1a x 80%” cannot be greater than or equal to “Box 1a x 95%.”
Thank you in advance for any insights or recommendations on how to enter the correct amount for “foreign qualified dividends and l.t. capital gains.”
(a) first , the Box 1a heading on the form 1099-DIV has a problem ( IMHO) -- it says "Total Ordinary Dividends ". It should say "Total Dividends " . I say this because Box 1b amount is a subset of Box 1a i.e. of the total dividend income reported in Box 1a, the amount reported in Box 1b is qualified dividend.
(b) I am not sure I understand your issue ( and/or why Turbo is complaining ). What I would expect ( for example :(
Box 1a ---- 1000, of which 1000* .95 = 950 is foreign source ( Total ) dividend income
Box 1b ---- 1000 ( all dividend is qualified ) of which 1000 * .80 = 800 is foreign qualified dividend.
To me this implies World dividend income is $1000 ----- Foreign Source dividend income (RIC ) is $950
World Qualified Dividend is $1000 ----- Foreign Source Qualified income is $800
---------------Foreign Taxes paid ( RIC) ------ amount in Box 7
Am I missing something here ? If I am, tell me more , please.
@pk, thank you for your note – and, I agree with your analysis.
To explain the issue using your numerical example, TurboTax displays a screen entitled “Any foreign source qualified dividends or long term capital gains?" during the Foreign Tax Credit interview. On that screen, TurboTax prompts the user to enter “foreign qualified dividends and l.t. capital gains.” When $800 is entered, TurboTax displays the error “this field should be at least $950” (where $950 = “total foreign income for this category” = Box 1a x 95%). However, based on the supplemental tax reporting information provided by the mutual fund company, the correct answer to the question is indeed $800 (= Box 1a x 80%) – which, of course, is less than the $950 minimum required by TurboTax.
Any insight on why TurboTax might be reporting this error? And, more importantly, how do I circumvent this issue and enter the correct amount for “foreign qualified dividends and l.t. capital gains”?
Thank you for your assistance.