How to get Foreign Source Income from VXUS Vanguard?

[johnsantaclara1]

Hi there, I have foreign tax paid from VXUS (VNGRD TOTAL INTL STK ETF) of Vanguard.

While entering the information for Foreign Tax paid section in TurboTax, I am asked for "Foreign Source Income". There was a page in my last year (2020) tax form with title "2020 Foreign Tax paid" with a column "Foreign Income" from which I had got the Foreign source income. But I can't find that page in my 2021 Vanguard tax form. I see the following. Please advise how to compute Foreign Source income from this info or how to find it. Thank you!

FOREIGN SOURCE INCOME PERCENTAGES
Fgn Source Inc Tot 90.34% Fgn Source Inc Qual 64.50%

Thanks again!

[Mike9241]

multiply dividends by that 90+% same for FQD  by 64+%

[johnsantaclara1]

Hi @Mike9241 , Thank you so much! Requesting one confirmation on which of the following 3 options are correct: Thanks again.

Box 1a= Total ordinary dividends = 16000 (example)
Box 2a=Total Capital Gain distributions = 22 (example)
VXUX Total Dividends & distributions =8000 (example)
Total Dividends & distributions = Box 1a + Box 2a = 16022

So, should it be:

1) Foreign income = [(box 1a)+(box 2a)] *90.34/100 = (16022*90.34/100) = 14474.27?

or should it be:

2) Foreign income = [(box 1a)] *90.34/100 = (16000*90.34/100) = 14454?

or should it be:

3) Foreign income = [Total dividends and distributions from VXUS only =8000] * 90.34/100= 7227.2?

Thanks again.

[FangxiaL]

You only pay foreign tax on foreign income. Based on your info, use $8,000 to multiple the percentage of foreign holdings, unless you have only one holding in your portfolio. 

@johnsantaclara1

[MJoyce]

Total dividends and distributions (including qualified and nonqualified dividends) are shown in the detail section of my Vanguard 1099 forms.  To determine "foreign-source income" to enter in Turbo Tax, do I enter that total ($6738.17) or do I have to perform some calculations with the 90.93% (Fgn source inc tot) and 68.92% (Fgn source inc qual)?  Thank you for your help.

[DaveF1006]

Yes and here is how to report:

1. Go to federal>wages and income
2. Interest and Dividends>1099 DIV
3. Report the Ordinary and Qualified Dividends  that it is listed on the 1099 DIV form in Box 1A and 1B.
4. Be sure to check the Box that indicates My Form has more Information that is listed in the Boxes so you can report the Foreign Tax Paid
5. Now go to federal>deductions and Credits>
6. Estimates and other Taxes Paid>Foreign Tax Credit
7. As you scroll through the entries, and report the income, you will reach a screen asking you how much of $XXXX.XX is foreign sourced income, here you will multiply 90.93% by the amount listed on the screen. Note this Box 1A ordinary income listed here. Box 1B amount is not entered in this section.

[pchew]

I have this same exact question. I'm really confused about which numbers to multiply together to get this value. Did you get any clarification on which of these formulas is correct?

[LoganathanB]

The income from foreign countries associated with the foreign taxes paid can be found on your form 1099 B, provided by your brokerage firm.

You can find the information on the statement in the details about dividends. Not every brokerage firm 1099B will look the same but it should look like either of the screenshots below

[scandellan]

@DaveF1006 Vanguard's consolidated form 1099 no longer lists Box 1A and Box 1B for each fund, as it used to until this year.

That's part of the problem the poster (me, too) is having.

Another is the inconsistent language used, making it difficult to understand whether foreign dividends and capital gains distributions are tracked separately here, or lumped together in "foreign source income". Some Vanguard international funds have both. The new consolidated 1099 form tells you both, but Turbo Tax's language isn't clear what's asked for in various steps of the interview process.

[scandellan]

@LoganathanB Vanguard's form no longer looks like the one you posted from another investment house. They don't specify Box 1A, Box 1B, Box 7, etc. for each fund. They tell you qualified dividends, nonqualified dividends, short-term cap gains, and long-term cap gains, for each fund (not even totaled, though we can add them up ourselves).

[AmyC]

Use the Vanguard charts for your information. 2021 Foreign tax credit information for eligible Vanguard funds. You need columns 1 and 3.

@scandellan

[scandellan]

@AmyC Yes, I had found that already, thanks. But, it still doesn't really answer the question originally posed.

There are two percentages listed, either on the Consolidated form from Vanguard, or the link you just posted. One is "Foreign Source Income (total)" the other is "Foreign Source Income (Qualified)". You've referenced a third, which is the "Foreign Tax Paid %", which I have no idea how to apply (to be clear, the Vanguard form **does** already tell you how much foreign tax each investment paid in $).

On the Consolidated form, it does not specify what these first two percentages are percentages **of**. Are they percentages of total (cap gains + dividends), or just percentages of dividends? As an investor, I see no reason to assume those are the same (different investments in a fund can certainly have a different mix of cap gains distributions and dividends, the ratio need not be constant).

On the link you shared, it seems to specify that the percentages are relative to Box 1a, which is only the total of dividends, not including cap gains. 

But, this really doesn't seem consistent with the questions TurboTax is asking on the interview forms, or on the Form 1116 (foreign tax credit computation) worksheet. Both mention "income", suggesting perhaps a combination of dividends + capital gains. And, on the worksheet, it very clearly asks for (h) Qual. Dividends and LT Capital Gains.

I think if you take the time to try to work through the calculation with the information the original poster has supplied, you'll see that none of the replies on this page actually specify how to input the data.