Foreign Tax Credit Computation Worksheet Line 1h

[debjani]

I have entered my 1099-DIV which included foreign income and foreign tax paid. All those amounts are accurate. During the review, Turbo says that the amount on line 1h (Qualified Dividends and LT Capital Gains) should be at least $3743. How did it calculate this amount? It does not correspond to the total of the qualified dividends and long-term capital gains from my foreign sources, that I got from my broker's site. Can I just accept its suggestion of this amount and move on? Could it create a problem during a future audit?

[rogge1722]

From the 1099-DIV Worksheet.

The minimum foreign qualified dividends = 1b +7d -1a.

The following procedure provides more details.

Open a new spreadsheet.

Column A is used  for both qualified and unqualified dividends, aka. “Ordinary dividends”.

Column B is used for qualified dividends only.

In cell A1, insert the worldwide ordinary dividends. This is the amount in the 1099-div, box 1a.

In cell A2, insert the foreign ordinary dividends. This amount is derived from the broker’s supplemental info.

In cell A3, subtract A2 from A1.  The result is the U.S sourced ordinary dividends.

In cell B1, insert the worldwide qualified dividends. This is the amount in the 1099-div box 1b.

In cell B2, insert the foreign qualified dividends. This amount is derived from the broker’s supplemental info.

In cell B3, subtract B2 from B1. The result is the U.S. sourced qualified dividends.

Each cell in column A must be equal to or greater than the corresponding cell in column B. If that is not the case then there is an error.  Recheck all entries.

[BillM223]

Could you clarify that "Qualified Dividends and LT Capital Gains" appears to refer to the tax computation worksheet, that is, line 1 is "Enter the amount of Form 1040 or 1040-SR, line 15" and line 25 is "Tax on all taxable income..." Otherwise, I don't know what line 1h refers to (there is no line 1h on the Qualified Dividends and LT Capital Gains Worksheet).

[rogge1722]

It is the foreign tax credit computation worksheet for form 1116.