Foreign Source Qualified Dividends

[TaxPlethora]

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:

• Box 1a (total ordinary dividends).
• Box 1b (qualified dividends), where the amount is equal to Box 1a.
• Box 2a (total capital gain distributions), exceeding $20,000.
• Box 7 (foreign taxes paid), exceeding $600.
• (This one mutual fund is the only investment owned that generates foreign income and taxes.)

The supplemental tax reporting information provided by the mutual fund company describes a “standard method” to calculate…

• Foreign source income:  multiply the amount in Box 1a of Form 1099-DIV by the Foreign Source Income Percentage (which is 95%).
• Foreign source qualified dividends:  multiply the amount in Box 1a of Form 1099-DIV by the Foreign Source Qualified Dividend Percentage (which is 80%).

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.”

[pk]

@TaxPlethora , 

(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.