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Foreign Taxes Paid

I've never had trouble with this in past years in TT, but....

 

I have foreign taxes paid on US based investments in two RICs and 1 Canadian stock reported on a 1099 which I downloaded from the investment company directly into TT.   Some comes from qualified dividends, some does not.

I also have foreign taxes paid on two Canadian retirement funds that pay taxes on required distributions.  

My spouse will also have foreign taxes paid on US based investments (but I haven't got there yet.)

All are passive income.

No matter how I work through the step-by-step (this is what, the 6th time through), the TT process does not correlate to form 1116.  It seems to jumble information between sources and makes no sense.  Can anyone provide a clear step by step guide about how to deal with this?  Am I missing something or is TT dysfunctional here as some seem to think?

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3 Replies

Foreign Taxes Paid

I have foreign taxes paid on US based investments in two RICs and 1 Canadian stock reported on a 1099 which I downloaded from the investment company directly into TT.   Some comes from qualified dividends, some does not.

you need to use 2 1099-divs one for RIC and other dividends except Germany and on the second only the German dividends

on line 7 for ric enter the foreign taxes paid on RIC

on line 7c select column a

on line 7d enter the RIC foreign income amount

on line 7b double click to bring IP a window that says form 1116  copy 1 - highlight with mouse then click link

in box 8 select RIC

 

for the second 1099-DIV follow the same procedure but only enter german dividend information

on line 7 foreign taxes paid on German dividends

on line 7c select column b

on line 7d enter the German income amount

on line 7b double click as above and the link to form 1116

in box 8 select germany

 

your spouse would follow the same procedures except she would need to use column c on one 1099-DIV and column a on copy 2 of the 1116

to finish these 1116s

you  must go to the 1116 comp worksheet and complete any lines that are apllicable

 

foreign pensions are General category income so you need a separate 1116 for these

in the jump o box type 1116 and create a name for this copy

open the form and click on the link at the top to get to the worksheet for data entry

select general category

country canada

description pension

enter the pension amount in column a (US $) 

in part II enter ftc paid converted to US$ in column r

 

 

 

 

 

 

 

Foreign Taxes Paid

I'm sorry, I don't get what you mean.

 

How do I "use" 2 1099-divs when only one (downloaded from brokerage) exists.

 

And where  are the lines 7-8 you refer to?

 

Thanks for your help!

JamesG1
Employee Tax Expert

Foreign Taxes Paid

The lines 7 and 8 referred to may mean Part II of IRS form 1116 Foreign Tax Credit.  See here.

 

By 'using' two 1099-DIV's, he means to make two passes under the form 1116 screen for the two types of income, one for income from Germany and one not assigned to Germany.

See the statement:  "A separate Form 1116 must be used for each category of foreign income for which you paid taxes."

 

 

 

One will be listed in column A and one will be listed in column B.

 

 

 

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