I have an ETF that reported US and foreign dividends, including qualified dividends and foreign taxes paid. The foreign dividends are reported in the supplemental information section of the tax statement provided by my broker. However, foreign qualified dividends are reported as $0.00 in that section. This cannot be right because of the proportion of foreign dividends to total dividends, and the amount of qualified dividends.
For example, assume total dividends are $10,000, qualified dividends are $7,000 and foreign dividends are $8,000. No more than $2,000 of US dividends can be qualified dividends, leaving a minimum of $5,000 and a maximum of $7,000 of foreign qualified dividends. Please correct my logic if it is wrong.
I have contacted my broker and the ETF in an effort to obtain the amount of foreign qualified dividends. They were not able to provide it to me. In fact, the ETF website contains a tax document that reports $0.00 in foreign qualified dividends.
Assuming that I will not be able to get the amount of foreign qualified dividends, which of the following alternatives would be the best way to report the dividends in my tax return for the purposes of determining the foreign tax credit:
1. Assume all of the qualified dividends are foreign qualified dividends ($7,000 using the example above).
2. Pro-rate the qualified dividends based on the ratio of foreign dividends to total dividends:
($8,000/$10,000) x $7,000 = $5,600 (using the example above).
3. Report $0.00 of foreign qualified dividends based on the information in the supplemental section and on the website.
4. Some other way.
I appreciate any suggestions you may have on this subject.
