E-file rejected due to ForeignTaxesPaidOrAccruedDt on Form 1116

[survij]

My wife and I had to take out required minimum distribution(RMD) from our RRIF ( RRSP) account. they withheld 15% tax on RMD and gave me 85%.

This requires form 1116 to be filled out . We did it successfully for last 10 years. for 2020 TT screwed up. 

Can anyone help me.? Does anyone has same situation?

Survij

[survij]

This survij again. 

Due to TT screw up of form 1116, We have filed for tax filing extension. We hope that with big community push and noise TT will fix the bug in form 1116 before oct. 2020 and then we can electronically file our 2020 taxes with form 1116.

Please get to TT and ask them to fix form 1116. 

Survij

[survij]

survij

I mean TT will fix for 1116 before Oct . 2021 not 2020

[Foxbat]

If you want a current solution look at my long composite post on page 24 of how to deal with the problem.  Most people find they can e-file by following those instructions.  Or you can wait and home TT gets around to fixing it some time in the future.  Take a look at the post (yes, it is a long detailed post and yes it is a big pain to have to go through it, but it solves the issue for most people) and let us know in a post if it worked for you.

[Foxbat]

Survig,

Sorry, I see you issue is about a Canadian RMD, not a mutual fund dividend with foreign tax withheld reported on Form 1099-DIV.  I do not even know what Form a Canadian RMD with withholding (by presumably the Canadian government) would appear on.  The long post on page 24 of these posts may, nonetheless, be helpful to give you an idea where things specific to your issue may have gone wrong in Form 1116.

[irsispita]

@drennman @Foxbat 

Thanks for clarifying. I am just starting to on my first 1116 journey. I have divs from both genuine RIC entities (ETFs) and individual stocks from maybe 5-6 countries. I think the Form 1116 expects me to list the total income from each country separately (and from the "RIC country" separately as well). So I am confused as to where you had to enter "Various" on that form. I appreciate the tip not to use "various" for dates. My situation also probably means that I cannot change "Various" to "RIC" on my initial 1099-DIV entry.  Does this sound right to you?

I am actually even more confused because I have a chunk of income from UK stocks. Those divs are not taxed in the UK but are still considered foreign income so, as I understand, I'll have to list them on Form1116 as well. Am I wrong here ?

I'll try with the "not simplified" method first and see if TT can handle that. But I appreciated your tips. Thanks !

[Foxbat]

Irsispita,

Each 1099-DIV needs to be reviewed for Box 8 entries.  Do this using the "Forms" approach instead of "Step-by-Step"; same with working on the Form 1116.   I have not tried mixing RIC and specific countries, but that is the correct approach -- however, the TT programming may not cooperate and you have have to put all as RIC.  More important is that all your passive income dividends be shown in one Form 1116.  You do that in each Form 1099-DIV in Box 7 by assigning it all to Copy 1 of Form 1116 (I used column A for all of my foreign passive category income).  If you have multiple types of income as shown in Form 1116 in the section before Part I -- then that is outside of my advice.  Again, most of us only have foreign dividends and taxes as shown on Form 1099-DIV that are from "Regulated Investment Companies" (RIC) -- known as mutual funds (such as Schwab, Fidelity, Vanguard, etc.) to we taxpayers.

Yes, all foreign income should be reported even if there is no withholding.  Having some foreign dividends without foreign tax can be a good thing -- it reduces the percentage of tax paid as a total of income and helps avoiding some of your foreign tax credit being excluded.

Most people find Simplified for AMT works best, but your tax circumstances may differ and you might need to use Standard.  If you have used one method in the past, then you are required to obtain IRS consent to change methods and that is, I am told, a big deal that may require the assistance of a CPA.  Using Simplified will NOT prevent you from e-filing, though it is possible you get a message saying that is part of the reason for the e-filing being rejected.  When the rest of the items are correct, then that objection for me and others has fallen away.  It appears to be a programming thing, not a real problem.  Maybe if you changed methods it might be real.

[drennman]

Following up on Foxbat's advice.  I have faced your situation of a mixture of mutual funds/ETFs (RICs) and individual stocks (Various).  

To be totally correct, it's my understanding that your RICs should be listed in one column (as shown in 1116 Part 1) and the individual stocks in a 2nd column, with Foreign Country as Various because you have stocks from more than one country (Part 1 as well).   If you choose Go to Forms you can see the 1116 that TT auto-generated and you will see what Foxbat is referring to.   But you can't enter this Part 1 column A & B info directly in 1116.  Just make sure as Foxbat explains that you don’t have Various any where in 1116 Part II which you can and should correct.

There is no need to list each country in its own column (Various is an IRS-valid entry for multiple-country individual stocks).   It's just needed as far as I understand to make the distinction between RICs and individual stocks.   The 1099-B you received from your broker should show the Foreign Tax Paid and the Foreign Income for each international holding.  So you will have to do some manual adding up of the two types.   Basic pencil and calculator (or spreadsheet).  

To get the RICs and Various to be reported into different 1116 Part 1 columns you will have to force it by creating 2 separate 1099-Divs for the same broker (TT does allow you to do this.  You can use the Go to Forms option and say add a new 1099-Div) - one for each class of tax & income (again RICs and Various) using the amounts you calculated manually and one where you check column A (RIC) and the other where you check Column B (Various).   You will see this as Box 7 & 8 on the 1099-Div.    I don't know if Easy Step allows you to do this.

If you do a data import from your Broker you will have to go back and modify 1099-Div Box 7 & 8 to reflect the amount you manually calculated. And then continue to add a 2nd 1099-Div.

This can sound complicated if not very complicated.  But if you print off the 1116, your 1099-Div and take the 1099-B your broker sent you, you will see how it works. (What is on 1099-Div Box 7 & 8 is what TT enters in 1116 Part 1.)  It's just some manual math and some extra data entry. 

Once you do it, you will be all set for next year.  And hopefully TT will fix a bunch of 1116 problems and the whole thing will be much more seamless next tax year.

[Foxbat]

drennman,

I had some rejects that seemed to relate to using more than one Form 1116 and more than one Column in the Form 1099-DIV Box 7 source.   When I realized that the columns are by type of income (passive income), not source, I combined the various Form 1099-DIVs Box 7 to all feed to one Form 1116 and with that to only one  Column (A  is what I chose) since I only had one type of income -- passive income and that all RIC. 

There were multiple unidentified issues going on when this was happening, so if I had eliminated all the blanks and "various" using multiple Columns might have worked as well.  I hope TT gets this sorted soon.

[drennman]

survij

Following up on what Foxbat said.  I also do not know how to solve your 1116 issue with the Canadian RMD.  But I can offer some methodology hints.  

Since you say you have been doing this for 10 years, look back at your 2019 1040 filing and compare the 1116 from 2019 with the one which isn't working for 2020.  Can you spot anything that's different?  You may have to use Forms View to print off the 2020 1116 and the 2019 one so you can compare line by line.   Something that's different will probably be the key to what's going wrong.   

Also compare the 2020 1116 with the Form you received reporting the RMD.  Is anything different from your RMD form?   It could be the way TT is transferring the type of income in Part 1 line 1a or maybe even the category of income?  But again just hints.  

It is even possible that Various or some other non-date entry  crept in as the Date Taxes Paid or Accrued in Part II.  Which we all know is deadly to e-filing success.  

This is the type of line by line analysis that Foxbat recommends (though but for TT we wouldn't have to do it).    Patience and perseverance!  

If you are sure there are no differences you can always default to a paper filing.  😊

Good luck!

[survij]

Hello Drennman,

Thanks for your kind words and suggestions.

I will definitely try that out . I usually fill out the form 1116 manually so there is less chance of any difference between 2019 and 2020. I will however, check it out tomorrow.

Thanks again.

P.S. 

I was told by TT helper that TT is working to resolve form 1116 problem. She also filled some form so that TT will inform me if they fix the problem. I hope TT finds the solution. If all does not work then as you said I will file the 2020 taxes by mail in Oct. 2021. ( I did file for extension)

[drennman]

Yes, I agree Foxbat.  I probably wasn't clear.  Yes, only one 1116 and you can have all your RICs in Column A and all your Various (individual stocks) in Column B of the same 1116.   And all are Passive Income.

The difficultly is how to get that to occur if you have both types reported on the same 1099-B.  If you have multiple RICs yes I agree they can and should all be added into one.  Just as if you have multiple individual stocks they should collectively be marked Various.  

But each 1099-Div has only one Box 7 & 8 so you can only aggregate one type of income as you must say in Box 8 if it's RIC or Various - you can't chose more than one type. So if you have both RIC and Various on the same 1099-B you have to use a 2nd 1099-Div to get another Box 7 & 8 so you can choose Various if you chose RIC on the first one.   And you have to divide up the tax and the income between the two types.

Alternately if you have a RIC at Schwab and a RIC at Vanguard, on each respective 1099-Div you indicate RIC Box 8 and Copy 1-1116 column A and TT correctly aggregates them.   Which it sounds like is your situation.

The problem is having both types (or more than one type) on the same 1099-B which it sounds like the situation Irsispita is in.  It's a workaround to get that to be correctly reported on the same 1116.  I hope I am being a bit clearer.

[drennman]

Survij

Thanks and Good luck!

Just keep the paper filing opting in case TT doesn't resolve the issue in your timeframe.  

[irsispita]

@drennman @Foxbat 

Thanks again for the suggestions and tips. I'll probably start on my 1116 inputs tomorrow and I'll see what the TT will ask from me and what I will get there. I am not sure how the TT software produces the Form 1116 right now, but I have to disagree with you there - the IRS clearly states in the instructions for that Form that income from each country should be listed separately. I guess they want to make sure the excluded countries are not included in the FTC calculation. That might be the problem with the TT this year - lumping all countries together as "Various" might be no longer allowed by the IRS. 

[drennman]

Irispita

Yes, that is what the top of the form says.  If you look at 1099-Div Box 8 you will see that Various is an option.  This is at the top of the pull down menu that you will see for that Box.  (If it wasn't allowed to aggregate countries, this option wouldn't exist  and you would be forced to chose country by country.)  As far as I remember this Various option has existed for decades.

If you choose Mutual Fund it will default to RIC for that Box 8.

If you want to list each county you can by doing the manual math and creating a new 1099-Div for each stock/country and linking to a new 1116 column for each.  I am not sure what happens after you link to column C.  I don't know if TT will require another 1116 (copy 2).  

I don't know if having many columns will cause any e-filing problems.  As you can read in this thread 1116 is a very fussy form (due to TT issues mainly).  

Good luck!