Foreign tax credit - Other gross income - country

[apollog]

In TurboTax 2020, when reporting foreign tax credit, I first choose income type. In my case "Passive income", then after adding a country, there is a screen asking me "Other gross income - [country name]".

The question is what it means "Other". Is it other to the "Passive income" I marked before or is it "Other" to forms 1099-INT, Form 2555, and Schedule K-1?

[LinaJ2020]

It is asking if you have any other gross income that is NOT from Form 1099-INT, 1099-DIV, Form 2555 or Schedule K-1.  

If your passive income is from one of the abovementioned four tax forms and you have already entered them in the program, it will not be counted as your other gross income.  You will leave it blank.  

If your passive income is not from one of those four sources and you have not entered it anywhere in the program, you will enter here as other gross income.  

The purpose of this question is to avoid miscalculating or double-dipping the foreign tax credit on your tax return.

Hope it helps. 

[apollog]

Thanks for the answer. But it raises another question.

My income was from a sale of an investment property. It was not reported on the above forms but I did report it in the rental properties and royalties section in Turbotax under Sale of property/depreciation. 

However, doing that did not make Turbotax recognize the foreign tax paid as credit. It will only count it as credit if I report it again under Foreign tax credit - Other gross income - country.

So, I am still in the dark on this.

Any insights?

Thanks.

[LinaJ2020]

Where in the Rental section did you report the foreign tax paid?  

When you reported the Sale of Rental in the program, you should not have entered the foreign tax paid amount anywhere under the Rental.  You should enter the foreign tax under the Foreign Tax Credit section. 

[apollog]

When reporting the payment of foreign tax, there is a section: "Other gross income - [country name]"

The question is about reporting the capital gain from selling the rental property in this (above) section after it was already reported as income in the rental properties and royalties section.

[LinaJ2020]

Since this is not from any source of Form 1099-INT, Form 1099-DIV or Schedule K-1, you would need to re-enter the foreign tax paid on rental again on this screen.  See image

[apollog]

Thanks Linda.

The question is not about where to report the tax that was paid. It is about reporting the income on which it was paid.

I report it once in the income section where you report income from rental property (in this case a capital gain from sale of a rental property).

Then in the section where you report foreign tax paid there is a question:

"Other gross income - [country name]"

So, it was not reported on 1099 and not on Schedule K1 but was reported before as I mentioned above.

And the question is if I need to report the income (not the tax paid on it) under this question "Other gross income - [country name]".

Thanks.

[ThomasM125 · Accepted solution]

Yes, you do need to report the foreign income here even if you reported it elsewhere on the tax return. The only exception would be if the income was from a 1099-INT or similar investment income form or from a K-1 schedule that had been reported elsewhere.

[Figgy1023]

I have received income from CPP and OAS as well as a pension from a private Canadian company, do I have to report all three of these incomes under "Other Gross Income" Canada for purpose of reporting my foreign tax credit? I have already reported them as income under 
SSA-1099 .

[AbrahamT]

No, you don't have to report it twice. Only report the amount of foreign taxes paid.

[MM137]

Are you asking about including those sources of income as foreign income on Form 1116 for calculating the foreign tax credit? If so, I have the same question. I know that my Canadian pension (taxed in Canada) gets included there, but I don't know about CPP and OAS. I'd like to include them there since it would increase my foeign tax credit.

[DaveF1006]

By provision of the income tax treaty between the U.S. and Canada, benefits paid under the Canada Pension Plan (CPP), Quebec Pension Plan (QPP), and Old Age Security (OAS) program to a U.S. resident are taxable, if at all, only in the United States. 

Even though the income is taxable in the US,  income from these pension plans do need to be added as gross income in the  the Foreign Tax Credit portion of your return in accordance with instructions for form 1116.

[Edited 02/13/24|5:51 pm PST]