I have a passive dividend income of $4000 from holding a foreign stock. I input this number from1099-div in TT. However, on form 1116 line 1a, it shows a very different number $1600. Why is that? Based on form 1116 form instruction, it seems line 1a should be $4000. Did I miss something? Thanks
is the $4K qualified dividend(s) then only about 40% is used in some cases in the FTC calculation. The reason is that you already get a US preferred tax rate on the dividends
see FTC instructions page 9
Yes, it is qualified dividend. I took a look at the instruction, yes, seems I have to adjust the amount of foreign source qualified dividends.
This is the first time I got foreign qualified dividend, since I have to adjust the amount, I only get a small amount of tax credit, seems I got double taxed? If this is US qualified dividend, I believe it is only 20% tax rate.