Foreign dividend income - qualified dividend portion

[laurag25]

I have never reported the qualified dividend portion on my foreign income as an adjustment to the total income, only having discovered how to do that now. Can I choose to not report it, since it is in my favor? Does the IRS really care about it?  Can I start reporting it now on my 2025 return, never having reported it previously?

[DaveF1006 · Accepted solution]

This adjustment isn’t optional, but you may be exempt from reporting this adjustment.You are exempt from making this adjustment if you meet both of these:

1. Your total foreign qualified dividends + foreign capital gains are less than $20,000.
2. Your taxable income are below these thresholds.

• Married Filing Jointly $396,250
• Single/Head of Household $198,125
• Marrid Filing Separately $198,125 

If those two conditions are not met, you will need to start reporting these. If you ignored these in the past, you need to amend your returns to include this adjustment

[laurag25]

Is the software smart enough to require you to fill in the qualified foreign income if your total foreign income is indeed over $20,000? Mine is under this amount so the software doesn't even propose it.  

[DaveF1006]

Yes, the software is designed to skip the adjustment screen if: 

1. Your total foreign qualified dividends + capital gains are under $20,000. 
2. Your taxable income is below the threshold for your filing status.

If your income exceeds those thresholds, TurboTax will recognize this. It'd ask you specifically to "Enter the amount of qualified dividends for [Country]." It will automatically multiply those dividends by a factor (like 0.4054 if you're in the 15% bracket) before putting the total on Line 1a.

If you are working in TurboTax Desktop, you can see this in "Forms Mode" (Desktop version) on the Form 1116 Worksheet, where the "Adjustment Exception" box is unchecked.