Foreign Tax Credit

[Kathy4]

The brokerage statement that imported didn't bring everything over, so I am reviewing sections that were flagged for review. I paid $67 in foreign tax to Switzerland. Passive income from a mutual fund. TT is asking me to enter the portion ($ amount) of the total dividends received that was from a foreign country or US Possession. Do I only enter the amount of the dividend that was taxed ($192)? Or do I enter the total dividends I received from foreign countries ($1722), when none of the other countries taxed me?

[pk]

@Kathy4  generally you would report total/gross foreign income from all sources  ( because this was a mutual fund  that invested in various countries).  You do not need to use the form 1116 with its limitations.  Because this was reported on a form 1099-div, you can take advantage of  "safe harbor "  ( up to US$300  per filer ) -- thius would mean that your full US$67 should be the allowable credit.

Does this help ?

[Kathy4]

I need to clarify that the other dividends were in different mutual funds. This foreign tax was in one fund and only Switzerland. All the other countries were other funds, and none of them collected a tax. So I think I would only report the dividend amount for the one fund that charged the tax. Not the total from all the various funds that didn't collect a tax. Correct? 

[pk · Accepted solution]

@Kathy4 , that should work. This is because your foreign taxes paid is under the  "safe harbor" limit, you would not use form 1116 and therefore no ratiometric allocation of US taxes to foreign  source  incomes would take place.