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Keith A
Returning Member

Foreign Tax Credit Reporting

The latest chapter of my 5 year struggle to properly report foreign tax payments.  I receive several brokerage statements that report Dividend Income by foreign country.  Turbo Tax does not deal with this issue well, in that each 1099 Div can only be used once in working through the step by step process -- accordingly, if you have multiple countries, it does not work.  I have been told previously that the fix is to create dummy 1099-Div forms, by country, and divide up the reported amounts accordingly.   This year, for the first time, the program instructions direct you to do so.  The alternative, which is not consistent with the IRS instructions, is to report all of the dividends as "Various."  I decided to do the work again this year to comply; I finished the return, resolved error messages, and e-filed.  The result was that my filing was rejected; the reason given was that you cannot e-file if you have more than one 1116 for any category of income.  Since all of these dividends are in the same category of "passive income" and I had multiple 1116 forms as a result of creating the separate county 1099-Divs, my return did not meet this requirement.  It would have been nice if Turbo Tax Premier would have advised, in the instructions, that the result of following the recommendation is to be disqualified from e-filing.

 

Anybody have a similar experience and any suggestions?

 

Thanks

3 Replies
rogge1722
Level 8

Foreign Tax Credit Reporting

You might try bringing up the f1116's for inspection. From TT's guidance, it states

 

NOTE: You may use more than one copy of Form 1116 to report the same category of income. This comes in handy when you have more than three countries to which you've paid foreign taxes on a certain type of income (frequently "passive category income", in the form of dividends or interest, when the above exception does not apply to you). Simply designate the second and later copies of your Form 1116 as the same type of income; we'll automatically label those copies as "Statements". This labelling occurs in order to distinguish the tax reporting for these countries from other copies of Form 1116 reporting different categories of income.

Applying this, on  the 1st Copy, look for the word "COPY 1" at the top next to "990-T". On the 2nd copy,  you should see the word "STATEMENT" at top to the far left of the word "COPY 2". Also, there should be no data on page 2 on the 2nd Copy.  The foregoing applies to the 3rd copy, etc.

 

wtmann45
Level 3

Foreign Tax Credit Reporting

And so the saga continues. Step by Step still does not work if you have multiple countries. I bought Premier edition this year to see if this problem had been solved, wasted my money. 

Keith A
Returning Member

Foreign Tax Credit Reporting

I hear you.  Here’s my solution for this year - I am reporting all my foreign taxes as “various.”  If the IRS doesn’t like it, yltheyl let me know.  I am NOT going to spend hours and hours on this again!

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