Foreign Tax paid - how to report and get a credit or deduction?

[Andy19008]

I received a 1099-Div showing that a dividend I received last year had a foreign tax paid (to Ireland).  I am confused about how to report this.  There's a dialog box asking me to specify if this is US Source Income, Foreign Source income, or just the more general Beneficiary level.  I have communicated with the company involved (Seagate, which is a US company, so far as I know), and they are not being helpful with this.  What to do?  

Second question... how do I know whether to take the tax paid as a credit or a deduction?

Thanks,

Andy

[DianeW777 · Accepted solution]

First, the income is both US Source and Foreign Source, the question is how much is foreign income.  The documentation that came with your Form 1099-DIV should provide the percentage of income that is from the foreign source.  This will help you figure out how much income is actually from Ireland.

Next, if you know you are not going to be able to itemize deductions then you want to take the federal tax credit instead of the deduction.  The following is the current standard deduction amounts for 2021.

• The standard deduction for married couples filing jointly for tax year 2021 rises to $25,100, up $300 from the prior year. 
• For single taxpayers and married individuals filing separately, the standard deduction rises to $12,550 for 2021, up $150, and 
• For heads of households, the standard deduction will be $18,800 for tax year 2021, up $150.

Taxpayers who are at least 65 years old or blind can claim an additional 2021 standard deduction of $1,350 ($1,700 if using the single or head of household filing status). For anyone who is both 65 and blind, the additional deduction amount is double. You're considered to be 65 on the day before your 65th birthday. 

• Foreign Tax - Credit or Deduction
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