Foreign Tax Credit: Qual Div and LT Cap Gains should have a value of at least $XXXX

[tax555]

When I get to the review, I am getting an issue stating:

"Form 1116 (COPY 1) -- Foreign Tax Credit Comp Wks: Qual Div and LT Cap Gains should have a value of at least $XXXX. based on the 1099-DIV worksheets that are linked to this country."

Based on the supplemental disclosure on my 1099-DIV froms, $XXXX is definitely the wrong dollar amount and it is unclear where TurboTax is getting this number.

[ThomasM125]

When you go through the foreign tax credit section in TurboTax, you are asked to assign a country to your foreign tax reported on your 1099 statements and elsewhere. You are also asked how much income was earned in each country. It appears that the income assigned to one or more of the countries must be less than or not much more than the tax paid. The income should be considerably higher that the tax, since the tax is only a small percent of the income typically.

I suggest you to back through your foreign tax credit entries in TurboTax and make sure you entered the correct income for each source of foreign tax paid.

[tax555]

All of the income is assigned to RIC and it is ~10x greater than the the tax.  My 1099-div forms clearly state foreign income, how much of the foreign income was qualified, and foreign tax. I entered these amounts exactly and checked the numbers countless times. 

The minimum figure that TurboTax is suggesting does not appear to have any logic behind it. It is many times higher than the foreign qualified income reported across all of my 1099-div forms. 

[rogge1722]

From the 1099-DIV Worksheet.

The minimum foreign qualified dividends = 1b +7d -1a.

The following procedure provides more details.

Open a new spreadsheet.

Column A is used  for both qualified and unqualified dividends, aka. “Ordinary dividends”.

Column B is used for qualified dividends only.

In cell A1, insert the worldwide ordinary dividends. This is the amount in the 1099-div, box 1a.

In cell A2, insert the foreign ordinary dividends. This amount is derived from the broker’s supplemental info.

In cell A3, subtract A2 from A1.  The result is the U.S sourced ordinary dividends.

In cell B1, insert the worldwide qualified dividends. This is the amount in the 1099-div box 1b.

In cell B2, insert the foreign qualified dividends. This amount is derived from the broker’s supplemental info.

In cell B3, subtract B2 from B1. The result is the U.S. sourced qualified dividends.

Each cell in column A must be equal to or greater than the corresponding cell in column B. If that is not the case then there is an error. Recheck all entries.. 

[tax555]

Thank you. It appears the the issue is because my 1099-Div has vastly different allocations of qualified and non-qualifying dividends for the SAME foreign ETFs between the main section of the 1099-div and the supplemental info. The supplemental section is showing $0 of qualified income for a few of the ETFs, even though these funds are 99% foreign and have significant qualified income in the main section of the 1099-div. Is there any reason that this would be the case? If so, is there a way to get turbotax to recognize this?

Example for ETF X using illustrative numbers: 

Total Dividends: $100

Qualifying Dividends: $60

Total Foreign Income: $95

Qualified Foreign Source Income: $0

[rogge1722]

It doesn't make any sense that you know an ETF has substantial foreign qualified dividends and the supplemental info claims there is none. It might be that whoever prepared either the 1099-DIV or the supplemental info made mistakes.

With regard to the example, the qualified foreign source income would have to be at least $55 to make logical sense and be accepted by TT.

[lmilner]

I'm in the same situation, and I don't know what do here.

[lmilner]

In the supplemental information, I can see that 100% of the dividends from the foreign funds were qualified, and 100% of the foreign income is from those funds. So the line at the end of the supplemental information that says $0 is qualified is wrong. To use the spreadsheet cells in the help given above, A3 is equal to A2. 

Incidentally, the only reason that the top line qualified dividends (1b) is not 100% of the top line dividends (1a) is because some money in this account was not invested in the foreign funds. What was invested in those funds is 100% foreign and 100% qualified.

[tax555]

I spoke to my broker (fidelity). For the supplemental foreign section of the1099, they allocate everything to the "Non-qualified" bucket if the ETF fund does not separately disclose the qualified foreign income. 

It appears that this is what is happening with the iShares funds I own. If you google "iShares® 2019 Distributions - Year End Tax Supplement Report" you will see that they only provide foreign tax and the total foreign source income %. Unlike many other funds, they do not provide the % of qualified foreign source income for their ETFs.

Do I need to manually allocate the foreign income between qualified and non-qualified income? If so, how is this done. 

[rogge1722]

I have 3 ishares ETF's thru Charles Schwab. From my supplemental info sheet, all 3 have amounts for both non-qualified and qualified dividends.

One of these is ishares MSCI Minimum Volitility (EEMV). From my info sheet, 53.68% of the total dividends are qualified.

I downloaded ishares annual report. Their fiscal year ends on Aug. 31. It discloses the amount of qualified dividends and the total income and the qualified income as of 8-31-19 is 50.8% of the total income.

So if for some unknown reason your broker cannot or will not obtain this info, I would suggest using an ETF's annual report as a reasonble substitute.

[tax555]

I already have that information.

I am missing the foreign qualified income % for a few ETFs that have both domestic and foreign holdings.

[wendywang]

what is 7D?

how to find qual div and LT cap gains for form 1116

[MarilynG1]

@wendywang If you entered a 1099-DIV and reported a Foreign Tax Paid, your broker info should have an amount for Foreign Dividends.

The Foreign Tax you enter on your 1099-DIV entry links to the Foreign Tax Credit, where you report the Foreign Dividend Amount (use RIC for 'country' in this case) from your 1099-DIV info. 

You may want to go back to your original 1099-DIV entry.  The Foreign Dividend amount and Foreign Capital Gains amounts would be larger than the Foreign Tax Amount. 

Click this link for more info on Reporting Foreign Dividends. 

Click this link for more info on Foreign Capital Gains. 

[wendywang]

Foreign Capital Gains amounts = Foreign Dividend amount - Foreign tax paid.  is this correct?

foreign tax paid and income

--------------------------------

Foreign stock     Foreign tax paid   Dividends  amount

A                                $xx                      $yy

Foreign Capital Gains amounts= $yy- $xx

[LinaJ2020]

Please see my answer on #6163451

@wendywang