I have a single 1099-DIV with income/foreign taxes withheld from two countries. After I tell TurboTax the 1099 is for one country, it doesn't allow me to select the same 1099 for the second country. How do I get the site to let me re-use the 1099?
A significant shortcoming of TT is that if you have to fill out Form 1116, it can support only one country per Payer. In the past, if there were more countries than Payers, using “Various” was the technique used to restore the 1 to 1 country/payer ratio. The following technique restores this 1 to 1 ratio by creating additional payers to equal the number of countries.
This addresses the issue of a 1099-DIV with Box 6 showing foreign tax paid to multiple foreign countries and it is necessary to identify and list the countries individually on Form 1116. This is done by utilizing Dummy 1099-DIV's as illustrated by the following example.
We have a 1099-DIV with Box 6 displaying the total tax paid to 3 foreign countries we will call “A”, “B”, and “C”.
Navigate to the “Here’s the dividend info we have so far” screen displaying the name of the Payer. This will be our Main Screen. Bring the Payer up in EDIT mode. Change Box 6 to the amount paid to “A”. Click “Continue “. Either the Main Screen will appear or 2 consecutive screens asking for dividends paid and the source country. If the latter occurs, insert the data for “A”, then continue to the Main Screen.
Click on the New Payer button. We will name this Payer “Dummy1”. In Box 1a, put a zero. This prevents TT from issuing an error. In Box 6, enter the tax paid to “B”. Leave the remaining boxes blank. Click “Continue” back to the Main Screen.
Again open up a New Payer. We will name this “Dummy2”. Put a zero In Box 1a and in Box 6 the tax paid to “C”. Click “Continue” back to the Main Screen.
Now when we go to the Foreign Tax Credit Interview Section, we are positioned to enter all the necessary data for each country individually.
Now we consider countries “D”, “E”, “F” etc.
When multiple copies of form 1116 are needed, they have to be created in the right order.
Using TT’s special instructions as a guideline, the following strategy is suggested. Assign to “A” the largest tax paid, then to “B” the 2nd largest and so on through to “F”. Then when we enter the Foreign Tax Credit Interview Section, we run them through in the same order; greatest to the least.
You may find on part 2 of Form 1116, it is necessary to type in the date for the fictitious Payers which will be the same as the actual Payer, usually 12/31/2016.
Where is the "Here's the dividend info we have so far" screen? How do I bring the payer up in EDIT mode?
Where is the "Navigate to the “Here’s the dividend info we have so far” screen"? I sure don't see it on my 2017 TT Premium.
A significant shortcoming of TT is that if you have to fill out Form 1116, it can support only one country per Payer. In the past, if there were more countries than Payers, using “Various” was the technique used to restore the 1 to 1 country/payer ratio. The following technique restores this 1 to 1 ratio by creating additional payers to equal the number of countries.
This addresses the issue of a 1099-DIV with Box 6 showing foreign tax paid to multiple foreign countries and it is necessary to identify and list the countries individually on Form 1116. This is done by utilizing Dummy 1099-DIV's as illustrated by the following example.
We have a 1099-DIV with Box 6 displaying the total tax paid to 3 foreign countries we will call “A”, “B”, and “C”.
Navigate to the “Here’s the dividend info we have so far” screen displaying the name of the Payer. This will be our Main Screen. Bring the Payer up in EDIT mode. Change Box 6 to the amount paid to “A”. Click “Continue “. Either the Main Screen will appear or 2 consecutive screens asking for dividends paid and the source country. If the latter occurs, insert the data for “A”, then continue to the Main Screen.
Click on the New Payer button. We will name this Payer “Dummy1”. In Box 1a, put a zero. This prevents TT from issuing an error. In Box 6, enter the tax paid to “B”. Leave the remaining boxes blank. Click “Continue” back to the Main Screen.
Again open up a New Payer. We will name this “Dummy2”. Put a zero In Box 1a and in Box 6 the tax paid to “C”. Click “Continue” back to the Main Screen.
Now when we go to the Foreign Tax Credit Interview Section, we are positioned to enter all the necessary data for each country individually.
Now we consider countries “D”, “E”, “F” etc.
When multiple copies of form 1116 are needed, they have to be created in the right order.
Using TT’s special instructions as a guideline, the following strategy is suggested. Assign to “A” the largest tax paid, then to “B” the 2nd largest and so on through to “F”. Then when we enter the Foreign Tax Credit Interview Section, we run them through in the same order; greatest to the least.
You may find on part 2 of Form 1116, it is necessary to type in the date for the fictitious Payers which will be the same as the actual Payer, usually 12/31/2016.
Turbo Tax has had this issue for many years. Why haven't TT fixed it??
Because they don't care that it actually takes longer for their customers to fill out Form 1116 than it takes for them to fill out the rest of their taxes. They don't care about their customers.
My broker is Morgan Stanley. They sent me two 1099's each with multiple countries listed that I have payed foreign tax to. The instructions plainly state to enter all countries, then next select one to enter the foreign sourced income. After entering just one country, all the other countries I have dutifully listed are simply tossed aside. The program gives me two choices, none of which address the other countries I have stated I want to enter data for. I have 9 countries from two 1099's to enter. According to this suggestion, I must dummy up either 9 new dummy 1099's (or 16 since some countries are listed in both 1099's), and then doctor my accurate 1099's to migrate the foreign tax (line 6) to the dummy 1099's. This is not just overly burdensome, but potentially very error prone. I have heard that if you make a mistake on foreign taxes paid, the IRS can slap you with heavy fines, and the returns can be audited forever.
Now, as a programmer with more that 45 years experience I can see that this form is a little tricky to do, but not at all impossible in my expert opinion. After all, isn't this why I buy Turbo-tax Premier? In the past two days, I have watched several You tube videos covering form 1116 just so I would be able to tell if Turbo-tax was entering my data correctly. After that miserable experience, I find that Turbo-tax has this one country per 1099-DIV limitation. Why? Perhaps they should just continue this kind of thinking and impose a one dividend payer per 1099-DIV limitation. In that case I would have to enter literally hundreds of dummy 1099'... one per payer? Its really not any different. Its time the guy programming this area asked for some help so this mess can be straightened out. I volunteer. I think it would be easier to re-factor the software than have to juggle 9 dummy 1099 forms every year, from now on.
I am bewildered by these answers. I see the comments that this is a shortcoming in TurboTax, and that TurboTax has "always" had this shortcoming, but this is not the first year that I needed to enter dividend and foreign tax information for multiple countries, and while I don't remember exactly what I did last year, I don't remember it ever being as unclear and contradictory as this.
Thanks to rogge722 for creating this work around noted above. I have used it the last 2years and it works fine. I did change the names of my Dummy 1099s to the name on my 1099 such as Schwab 1, Schwab 2 etc. On the 2017 input I did have a minor problem on the Foreign tax Credit Worksheet. TT filled in my foreign dividends on Part 1 line h which was fine but then they also included them on lines i and j as well which is incorrect. It didn't seem to have any effect on the computation but it was still incorrect. I correct the problem by going to the 'Forms view" and changed the information on Part 1 line 1i and 1j to 0.0 which solved the problem and had no effect on the 1116 forms. If you have a bunch of these forms, rogge work around works. Papa John
I appreciate the answer from rogge also. I also like Pappa John's suggestion for naming the dummy 1099s as well. It would show intent were you ever to audited. I hope.
The issue of what to enter or if to enter the FEIN of the issuer is not addressed. My issuer is Edward Jones for three countries. I entered the Ed Jones FEIN again in the two dummy 1099s.
I also wondered about not entering income with the dummy 1099s.
I’m out of town and don’t have access to my computer. My recollection is that i did not fill in the FEIN in when setting up the dummies. If you entered the FEIN and did not get any error message your probably fine.Also when setting up the dummies I entered 0.0 in the dividend income box.
When you go through the foreign tax credit screens, you will get a prompt to enter the foreign taxable income related to each of the dummies with foreign tax credit. I hope this answers your question. Good Luck. Papa John
RE: 2017 tax year....Does this solution also work for the on-line version? There's really no forms view in this version. Is there a way to see the actual 1116 forms after I enter this data? I kinda get setting up the dummy 1099's But wonder if anything about the above info is different for online only version. Thanks p.s. using the Self-employed version.
UPDATE a few days later--- my wife actually posted this question but within hours had it all figured out.
Using the dummy method described above she named them ie: "Wells Fargo Oakmark" or whatever fund. Then keeping track of the descending order to list each tax credit individually (after creating a 1099 for each one)- only enter each dummy sheet separately, don't gang them up under the RIC category for instance, but check the boxes to select them by descending amount of tax paid.. Saving your instructions above for next year! Thanks rogge722
We bought TT this year because we used HR Block software last year and it messed up our foreign tax credit so badly we had to consult a professional. We heard that TT did a better job of dealing with this so this is especially disappointing . Is there no tax software that can deal with this? Super frustrating.
Clearly there is a problem with the software. Intuit should fix it immediately. This is inexcusable. The recommended solution is a crazy complicated workaround -- Intuit can do better, and has a responsibility to.
my thanks also to rogge1722 for the workaround. I am mystified why one cannot enter "Various", as one had in the past, as it was much simpler than creating dummy payers for each country. Like Pappa John, I found that the 1116 form had the dividends incorrectly entered on lines 1i and 1j and appreciated his suggestion to simply edit these lines to 0.
This is very annoying that Intuit doesn't seem to think it is necessary to modify their code to be compliant with the changed IRS requirement. Shame on you Intuit!
Every year you have to remind yourself what the workaround is for multiple countries and one 1099 and then deal with a bunch of dummy countries and get them in the right order. It would seem that more individuals diversifying into foreign markets would create an incentive for Turbo Tax to simplify the 1116 procedure for claiming credits for foreign dividend taxes paid. You have a insane desire to find a better tax software. Then there is the 8621 form!
I believe I followed the method and thought it all worked. However, I have 3 mutual funds. They have 3 separate 1099 Div and I entered them 3 separate times putting them in order as instructed with my other foreign tax 1099s. Turbotax put them all together - I only have one RIC country on a 1116and the total dividends does not make sense. Aren't they supposed to be listed separately but each of them having RIC as the country? I was it said not to lump all the RICs together so I didnt but turbotax did it for me.
This answer recommended answer is from 2 years ago. Shouldn't this have been fixed by now? I had the same problem. 1099 step by step lets me select 4 countries, but after inputting one country amount it doesn't let me input the others. Overriding the imported amount and creating dummy 1099s seems a kludge and likely to interfere with e-file (e.g. overriding calculated fields prevents efile), so I didn't try this and had to give up the foreign tax credit.
The general strategy suggested is correct, however, it leads to errors when Turbo Tax attempts to complete the 1116 form. The reason is that you can't put zero in for box 1a. You can't be taxed on zero dividends. The only true work a round it to split out all the data (1a, 1b, 2a, 7) regarding the foreign countries into separate 1099-Div as suggested, but you also have to subtract the 1a, 1b, 2a and 7 data from the original 1099-Div or you will get double taxed. The problem is that TT assumes that each 1099-Div only has a single foreign country in it. I agree it is a disgrace that TT has not fixed this so one can enter directly from a single 1099-Div. I even upgraded to Premier because I though it might work in that program. I am going to ask for my money back. Bottom line is that I failed to get my taxes in by the 15th.
The failure of Intuit to address this issue is unacceptable! I bought their tax software to make my tax preparation easier & having to resort to a bunch of rigmarole to make it work right is ridiculous! Hey Intuit, show your customers you care & fix this mess.
I think I understand the workaround from a foreign Tax credit perspective, but won't this create a problem with more 1099-div in turbotax than actually received? Will I still be able file electronically?
Do you mean box 7? Box 6 is investment expenses. Box 7 is foreign tax paid.