In Form 1116 step by step there is a question for Foreign Qualified dividends and LT Capital Gains

[vident]

My question is a about foreign stock held as ADRs in a Brokerage account. The 1099 shows the Foreign Qualified dividends, so I can enter those. What about Capital gains on ADRs? Do I have to figure these out from 1099-B and enter these here?

Thanks.

[rogge1722 · Accepted solution]

The sale of ADR's on a U.S. exchange is the same as the sale of any U.S. security.  There is no foreign tax paid, thus the capital gains is a domestic issue  only.

[vident]

Thanks for the clarification on capital gains. My 1099 shows the qualified dividends for the foreign ADRs. That I should put in the specific field?

Thanks!

[rogge1722 · Accepted solution]

Dividends, whether qualified or unqualified received from a foreign company held thru an ADR can be considered foreign sourced income if you need to fill out a form 1116.

[vident]

@rogee1722 

There is a new problem. So I entered the qualified dividends from foreign sources from my 1099.  My total income from foreign sources is 2231 and I entered qualified dividends by adding the values from 2 1099s and that came to 1230. However, Turbo Tax is giving me an error that Qualified dividend field must be at least 2059? Where is it getting that number from and at the moment I am stuck.

[rogge1722 · Accepted solution]

There is a contradiction possibly due to interpretation of definition.  Use the following procedure on each 1099 individually. 

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..

During the interview, it will ask for the foreign-source income. That is the amount in cell A2.

Later it may ask for foreign sourced qualified dividends and LT cap. gains. That is the amount in cell B2.  The LT cap. gains are from the 1099-div box 2a but they can be ignored unless you can determine the amount from foreign sources which in most cases cannot be done.

[vident]

@rogge1772

Thanks. There was a calculation error on my part in calculating the Qualified Foreign dividends. I had to add 4 items over 2 1099s to get this and somewhere I had miscalculated. However, after I fixed it, the form 1116 is showing a carryover for 2022. And it gives me an error: 

Total outgoing c/o has a value that requires Form 1116 Schedule B which will be available in a future update.

Does that mean I have to wait till 3/31 or later for this form and may not be able to file the tax returns? I owe taxes so can I go ahead and pay what I owe or wait till this form is available and complete the tax filing?

Thanks!

[vident]

@rogge1722

Thanks. There was a calculation error on my part in calculating the Qualified Foreign dividends. I had to add 4 items over 2 1099s to get this and somewhere I had miscalculated. However, after I fixed it, the form 1116 is showing a carryover for 2022. And it gives me an error: 

Total outgoing c/o has a value that requires Form 1116 Schedule B which will be available in a future update.

Does that mean I have to wait till 3/31 or later for this form and may not be able to file the tax returns? I owe taxes so can I go ahead and pay what I owe or wait till this form is available and complete the tax filing.

Thanks!

[rogge1722]

From other postings, TT will have schedule B available later this month for printing but is not supported for e-filing.  That should be enough time for file a paper return before the April deadline.

[vident]

@rogge1772

Despite giving the error I mentioned about Schedule B Form 1116, Tutbo Tax allows me to go ahead and go all the way to eFile. I have not clicked the eFile button. Is it because the form is not needed for this year's return?

Or the eFile will get rejected if I try it? Is there any harm in trying to eFile? As I believe it allows  5 attempts?

Thanks!

Regards,

Ravinder

[RobertB4444]

@vident  The 1116 schedule B will be available for efiling apparently, as of March 11th.  However, you should go ahead and attempt to efile.  If the return has all of the necessary information already entered then the program has determined that you don't need a schedule B if it goes through right now.  If it is rejected then you should try again after Friday.