What is foreign source income when claiming tax credit on vanguard fund? Is it "QDI eligible foreign income"?

Foreign source income is the sum of unqualified dividends, qualified dividends and capital gains. TT wil ask for the amount of QDI (qualified dividends) only if the following holds:

- You have foreign qualifying dividends or long-term capital gains totaling more that $20,000, OR
- Your total income exceeds the following amount for your filing status:
  - Married Filing Joint or Qualifying Widow(er): $223,050
  - Single: $183,250
  - Head of Household: $203,150
  - Married Filing Separate: $111,525

Thanks for the reply, TT isn't actually asking for QDI. It has my foreign tax, which is small (<$100) and after I verify that it asks for "foreign source income", but I'm not sure what that is supposed to be. Since the amount is small I ended up just switching to taking a deduction rather than a credit, and avoiding this question.

Why are people constantly giving a first answer, but not the proper answer for this question, and then never returning to follow up? Really infuriating.

Question was not answered.  When TT asked "What portion of dividends and distributions were from a foreign country?"  What do I put down, Foreign income or QDI eligible income?

TT wants the total of all foreign dividends (both qualified and unqualified) and all foreign capital gains. I don't know what  Vanguard includes or excludes by the phrase "foreign income";  If you go to their website, they should have an exact definition of what that and the other phrases mean.

i'm in the same situation, Vanguard has 1 page that shows the foreign tax (from box6), foreign income, and QDI eligible foreign income. So in TT, when going thru the foreign tax credit screen for a particular mutual fund, it is asking to enter the amount - Foreign-Source Income.  So just like the original question and the one posted by gradysullivan, i think its just either the number under foreign income or QDI eligible foreign income, both of which are lower than what's in box1(total ordinary div)or box1b (qualified dividends) but i'm not sure which one. anyone knows?

I want to know the same thing!!!  Dragonglazz thanks for clarifying..

I'd like to know the same thing too.  From my brokerage statement, a foreign source total and a foreign source qualified income are quoted.  Those values do _not_ include any capital gain, long or short, in the amount.  From all that I am reading here, I'm confused.  It seems some responses say the total should include capital gains.  I'm beginning to think that the what should be reported is the foreign source total dividends, both qualified and non-qualified and that if the income exceeds $20K, further TT interview questions are triggered requesting the amount of qualified versus non-qualified.  I am hoping that someone with TT can clarify what specifically the foreign source total is to include and which, total or qualified, is supposed to be reported in the initial part of the interview!

I just called TT.  I found that in the Foreign Source Income interview, the income to be reported is the total of the qualified + non-qualified dividends....no long or short capital gains.  A caveat though -- my brokerage statements provide the total and qualified amount, i.e., they do not require me to sum up the information myself.  I state this caveat because I have another brokerage account which also provides the percentage of the income that is allocated to foreign sources, and in one of them, I cannot figure out how they came to their particular value.  So the conclusion is trust your brokerage statement's foreign income section and report the total.

Thanks, @biisager. I'm glad someone answered the question!

I have the same question but am still not clear on the answer.  It seems simple, Qualified, non Qualified or 0...or sum total.  I imagine that it might mean Qualified but am not sure.  TT gets pretty heavy into the box 6 on the 1099 but I have no box 6 - their answer to that was that it is an error and 0 is the correct fill-in if you have a box 6.  I have a simple 1099 not a brokerage statement.  But what do I do?

mlpaine#  the 20181099-DIV changed in 2018 box 6 is now box 7

I just read this whole post.  Isn't it frustrating that something so common (owning mutual funds that hold foreign investments) should be so difficult to report.  Vanguard is giving less than adequate information and Turbo Tax Premier is totally confusing.  I am a customer of both and they are doing a less than adequate job.  I did manage to finally get past the errors in my return, but I am not sure I reported this correctly.  I was wondering if anyone would be brave enough to post a mock up of a 1116 form to show how this should look (you need to over $300 single or $600 married to be required to fill one out)?

I am still confused about what to enter for foreign dividends received from a Vanguard Statement is it the "Foreign Income" or the QDI eligible foreign income"??  Please help, this is all I need to complete my tax return.

On a Vanguard statement, there is a separate listing of all dividends. Usually on the statement there is a column for the foreign tax on the dividends. When you locate a foreign tax you should look to the left and you should see the dividend amount. Do not add the Qualified Dividend amount if there is an amount.

You will need to add all the dividend amounts to find the "Foreign Income" amount on the foreign taxes.

After reading through two pages of replies, I finally found the answer I need from your reply!

In other words, to answer the "Report Foreign Dividends" TT interview using my 1099-DIV from Vanguard, I should add up all the "Security Total" in Box 1a (total ordinary dividends) with a non zero Box 7 (foreign tax paid) on the same row.

Thank you so much!

So I've read this thread and am still confused.  KurtL1 came close to resolving for me, but still a few questions.

1.  On the Form 1099-Div, I see Box 7 with the Foreign Tax Paid.  I look to the left and there are 2 columns with dividends.  There are Ordinary Dividends (Box 1a), and Qualified dividends (Box 1b).  So is the "Foreign Tax Income" the "Security Total" (which is the sum of each dividend) for Box 1a, Box 1b, OR the sum of the Security Totals for Box 1a and 1b.  To be extra clear, if the Security Total for Box 1a is 5, and the Security Total for Box 1b is 3, is my Foreign Income 5, 3, or 8?

2.  There is a separate tax form entitled "2019 Tax Paid" with lists the total foreign tax paid.  There are also 2 other columns, "Foreign Income" and "QDI eligible foreign income".  Foreign income is very similar, but slightly higher, than the Security Total for Box 1a.  QDI eligible foreign income is very similar, but slightly higher, than the Security Total for Box 1b.

  a.  WTF?

  b.  Should the numbers on the Foreign Tax Paid form be used to determine Foreign Income?  If so, is it just Foreign Income, QDI eligible foreign income, or the sum of both that's used?

Thanks for your help!!!

So not to answer my own question, but I called Vanguard and found out the answer.

1.  So Foreign Tax Income is NOT the amount in Box 1a, 1b, OR the sum.  Do NOT use the amounts on the 1099-DIV to determine foreign income.

2.  First, a correction.  The amount on the "2019 Foreign Tax Paid" Form is not higher than the amounts on the 1099-DIV, it is slightly lower (at least for the fund that I was looking at).  With that out of the way, you should use the Total Foreign Income identified on the "2019 Foreign Tax Paid" form.   So this answer was confirmed with Vanguard.  However, I think (but did not confirm) the reason for the difference between the 1099-Div and the "2019 Foreign Tax Paid" form is that not all of the dividends come from foreign companies.  In my case about 98% of the dividends came from foreign companies, which is why Foreign Income is slightly lower on the "2019 Foreign Tax Paid" form than the amount listed in Box 1a of 1099-DIV.

I'm not sure of why QDI eligible foreign income is identified, but at least for my purposes it doesn't seem relevant.

TLDR: just use the info on "2019 Foreign Tax Paid" form.  Ignore QDI eligible foreign income.

Thanks for your answer!  Vanguard does not invest in any countries like Iran or Cuba that we are not allowed to claim the foreign income or taxes paid - correct?   Said another way, we can just take the  sum of unqualified dividends, qualified dividends and capital gains as you suggest and not have to subtract any unqualified foreign income?

Qualified foreign dividends are from qualified countries. Vanguard does publish this 2021 Foreign tax credit information for eligible Vanguard funds which should answer all your questions. You just locate your fund, multiply your investment amount times the various percentages to get your answer.

@Chaz9

@AmyC: Thanks for the Vanguard link! 

To clarify: Should I multiply my "Total ordinary dividends (Box 1a)" from my 1099-DIV by the "Column 2: Qualified foreign dividend income" from the 2021 Foreign tax credit information for eligible Vanguard funds publication to find my qualified foreign dividends for each Vanguard fund (International Explorer, etc.)?

And I would choose the "These foreign dividends are from a mutual fund/RIC" option and not "from another source" on Turbotax after I enter the amount of the foreign dividends?

Thank you!

RIC is the correct option for the 1116. I am glad you read the directions for the 3 columns! Follow them, for the correct qualified dividends and tax paid. Column 1 is for the foreign source income. 

@richardk19