Foreign Tax Credit without 1099-DIV

[timbonicus]

I paid foreign taxes to Sweden due to a sale of stock that vested mostly while I resided in Sweden. I understand this can be filed as a Foreign Tax Credit on Form 1116; however, the Foreign Tax Credit questionnaire in TurboTax insists on selecting countries reported on a 1099-DIV. I do not have a 1099-DIV, only the submitted Swedish tax return.

The income from the stock sale was reported by my company on my U.S. W2, but due to the vesting the taxes are owed 92% to Sweden. Therefore I filed an income declaration with Sweden on the 92% and paid taxes on that. Now I need to exclude those taxes from the amount owed based on the W2.

How can I report this tax credit?

These are the steps I took:

• Search 'Foreign Tax Credit'
• Click 'Jump to foreign tax credit'
• Continue > No carryovers
• Take a Credit > Continue
• Presented with the screen titled 'Where Did You Receive Dividend Income From?', no other option to continue without a 1099-DIV

[tagteam]

@Mike9241 can most likely answer this.

@pk as well.

[pk · Accepted solution]

@timbonicus , my apologies for having missed this one --

The situation as I see is 

(a) You a US person ( citizen / Green Card ), worked  abroad ( Sweden )

(b) Your  company stocks vested while you were a resident of Sweden and you have now sold these

(c) Sweden has  taxed this gain

What I cannot see from this info  is whether you were a US person when the vesting occurred , when the sale  occurred or?  What I am trying to determine is whether this sale comes under US taxation at all.-- please send me some details if you can.  If you are (then and now) a citizen, then the questions go away.

The problem you are having is the  recognition of the transaction ( sale of the stocks ) and the treatment of the foreign tax on this so as to reduce the double taxation bite.  

I just an through a simulation of stocks sold  in Sweden for a US person residing in US

In the personal income series, I selected what I want to work on  --then down to investment income to record the sale of the stocks. So now this is recognized  for US purposes   ( note that the basis of the stocks/asset sold .

Thereafter I went to "Deductions & Credits income" tab ,  "I will select what I work on .. ",  " Estimates / Other Taxed Paid" -- from here on follow through screen by screen --- that should fill out the form 1116.  But read the questions carefully , some of the wording is pretty "unhelpful and opaque".  But it does the job.   If you are using desktop version then it helps between  "step-by-step"  and  " forms" modes -- to see what Turbo is doing.  

I hope this help in getting you going.

pk 

[timbonicus]

Thanks for the reply @pk!

Yep, you laid it out correctly. I am (then and now) a US citizen. I'm using TurboTax Premier Online and I don't see exactly what you're describing. I can go to "Deductions & Credits" > "Estimates and Other Taxes Paid" but then have options of:

• Estimated Tax Payments
• Income Taxes Paid
• Sales Tax
• Foreign Tax Credit
• Credit for AMT Paid in Prior Year

Going to "Foreign Tax Credit" lands me in the same situation as the original post. Going to "Income Taxes Paid", then the only relevant option seems to be "Withholding not already entered on a W-2 or 1099" and that goes into a Federal / State / Locality breakdown that doesn't seem right for this purpose.

[pk]

@timbonicus , ok so you got to the right area and then ...   I will turn on my system again in the morning and  make notes for each screen.  That should guide you. As I said , even though I knew what I was doing/ expected I had to go round three times  because screens and the wordings  have changed/abstruse.    I am on PDT -- so tomorrow  my 11 or so  I will be back.

pk

[pk]

@timbonicus , I just had a long update  and now  after going through and noting down every screen, I am unable to find a place  to enter the taxes paid -- everything else works  but no entry point.  Thought I had found the entry point in a very strange screen and not  very logical place.  I will need to delete the whole file so I can start clean -- it will take a little while. So cannot keep my 11 AM timing.   Also note that I am not familiar with online version but there should not major differences.

sorry to let you down 

pk

[timbonicus]

I got a bit further on this; I did have 1099-DIV foreign income (unrelated to the stock sale, from other investments). So I had to assign that to an appropriate country before being allowed to continue.

Now I've been able to complete that 1099-DIV foreign income as passive income and create another Form 1116 with General category income. Then I can add Sweden but the next prompt says:

> Enter descriptions and amounts for any other gross income you received from sources within Sweden.

The screen after that asks about Definitely Related Expenses. In this case, it was not additional income from Sweden but income reported on the W-2 that was taxable in Sweden instead of the US. It seems like I should be trying to exclude the income reported to Sweden, which was also reported on my US W-2, as the taxes have been paid on that amount in Sweden already. Do you know what I should be entering in these prompts?

[pk · Accepted solution]

@timbonicus , I am sorry I was out of town and did not see your note in time.   Now it is my turn to be confused -- how did you end up having the same amount included in your W-2  and also in your Swedish income ( being taxed by Sweden ).  I think you have  ( if you have not resolved this  issue already  ) -- (a) take the whole thing to a tax professional  whom is familiar  with international  tax issues and filings thereof or  and if you still have time to do so  (b) move over to  a downloaded version of Home& Business, prepare the return again and send me a PM and lay out where we actually are  -- perhaps with more details , we can work on this together  because this will allow for looking at the forms themselves and see where the Turbo ( or we )  is getting confused. Either way it is an additional cost  and you have to work out whether it is worth it.

Sorry for my delay is responding

pk