foreign tax credit is not showing up (2018)

[mbekken]

I had about 2400 in foreign taxes paid, reported on my 1099-DIV for 2018. Some went to Brazil (VALE qualified dividends) and some was paid to the Netherlands because CBI had some sort of issue and had to pay a bunch of tax which they passed through. For the Brazil, there were dividends that the tax was paid based on. For NL, there were no dividends, just tax. I can see where the NL taxes may not come through because there is no income for them, but why do I get 0 on sch 3 line 7 instead of at least the Brazil portion of the tax? Is there a place I can enter the CBI tax charge? I have plenty of income, so that is not the problem.

[Anonymous_]

Answer to receive more exposure - posted in the Community Basics section

@pk ??

[pk]

how did you report the foreign tax -- using the DIV  worksheet? And did you enter the total foreign tax and the total foreign income or what ?  Are you using on-line version or desktop?  I am assuming that you are filing a form 1040 ( yes? ) --- and therefore  what is the world income  and foreign  sourced income ?  Are you using form 1116 ?

[mbekken]

how did you report the foreign tax -- using the DIV  worksheet? I imported the documents from Ameritrade. I went into the interview questions and verified that the foreign tax paid shows up, along with the foreign income.  I use the desktop version, and am filing all gazillion pages of form 1040. I want to claim the credit. At one point it made me a form 1116 but it was blank. The foreign tax came from Brazil and from the Netherlands. The NL tax, however, does not have any associated income. Apparently CBI did something that made them have to pay a bunch of tax and they passed it all along to the shareholders, because it is not bad enough that the stock is worth a 10th of what it used to be worth, we should also pay 3K in tax to The Netherlands. The Brazil income is dividends from VALE, who mines iron ore.

[pk]

OK , as I understand from your post, you entered all the details  into TurboTax  desktop version.  A point to note is that if the foreign tax is less than $400   ( from 1099-DIV / INT etc. ) then you just have to tell TurboTax that you want  tax credit and it should fill out the credit.  On the other hand if you declare more than this amount , TurboTax will opt for form 1666 --- this allows for recognition of larger amounts   but then the allowable  credit is based on a ratio of foreign income to world income  -- thus if you have  say 99% US based income and only 1% in foreign income, your allowable  foreign tax credit for the year  will be approx 1% of the total recognized foreign tax paid.  Also note that penalties  or other assessments , even though passed through by the broker are not eligible for foreign tax credit ( limited to tax on income ONLY ) -- so if your broker  had to pay fines/assessments  to NL, then this can only be used to reduce your basis on the asset/investment, not treated as foreign tax.

Does this help ?

[mbekken]

Great. This has resolved it. What I did, since the NL tax is not deductible anyway was changed the foreign tax paid to only reflect the portion paid to Brazil, which brought me under the $400 that triggers the 99% global. Now it is deducting the Brazil tax. Then when I sell the CBI, you say I can adjust the basis of the stock to reflect the tax paid at that time, yes?