How to report income tax withheld from dividends on stock held in a foreign brokerage account

[nice3488]

My spouse has a foreign brokerage account based in South Korea. The account has stocks in several US companies. The dividends paid by these US corps are subject to a 15% corporate withholding tax in the U.S. These taxes are not tied in anyway to her SSN and no 1099s are issued due to the account being a foreign broker. How can we report that $X amount of dollars was withheld at the source for these dividends?

Oddly, since the dividends are qualified dividends and not subject to tax due to our income threshold, if I reduce the dividend total by these taxes and report a lower dividend income amount, this actually increases our tax liability.

[ErnieS0]

In answering your question, I’m assuming your spouse had U.S. tax withheld in the foreign brokerage account based in South Korea.

Enter foreign dividends as if you received a Form 1099-DIV.

1. Type dividends in Search (magnifying glass) in the top right
2. Click Jump to dividends to enter your dividend info. Your screens will vary depending on what TurboTax product you are using.
3. Enter any U.S. tax withheld in Box 4.

[nice3488]

Hello, I know that this info can be manually added to box 4 of 1099-DIV.

My concern is that doing so will automatically add this withholding to line 25 of 1040.

Without a valid 1099 reported to the IRS, I'm afraid this will flag my return for an audit--even though the taxes were legitimately withheld from dividend earnings.

[DianeW777]

The IRS has the same document that you received. If you had federal tax withholding included on your Form 1099-DIV in Box 4, enter it into TurboTax.  The return will not be flagged for this reason but like all tax documents keep it with your tax return file should they want you to send a copy of it later.

@nice3488 

[nice3488]

The IRS does not have this document since it is issued by a foreign brokerage account--foreign brokers are not under US law and thus are not required to issue 1099s

[nice3488 · Accepted solution]

Update: I ended calling the IRS hotline for international tax payers. I was connected almost immediately with almost no wait. The IRS rep said to report the taxes withheld in 1040 Box 25c which is used for 'Other Tax Withholding'--I have not found a way to do this automatically in Turbotax, but since I am using the desktop version, I was able to manually enter in the tax worksheet. The rep said to submit a copy of the foreign broker statement showing the taxes withheld as well as a statement/explanation referencing the applicable tax treaty and dividend withholding specified in said treaty. The rep even guided me to the treaty document locations on the IRS website.